Customer participation: taking your customer loyalty engagement strategy from points to participation
Program managers have learned over loyalty’s 40-year history that both financial and experiential elements are needed for a strong value proposition. Customers have long wanted both tangible and emotional inspiration – and if they get those from a brand, they’ll respond.
As programs have proliferated and matured, the bar has been raised in both of these areas. Future loyalty programs must provide financial rewards that are material and achievable, as well as experiential elements that create seamless interactions and emotional connection.
That’s not all. On top of getting financial and experiential elements performing at their top potential, brands today must meet a new, third macro expectation – brand participation. As Forrester’s 2022 Retail Topics Insights Survey1 has confirmed, all three elements are critical to engagement in the future.
Raising the bar on financial rewards
Financial rewards and incentives, whether points, miles, or cash back – remain core to how program members value their membership. Of course, rewards that impact bottom line cost are desirable to customers, especially in today’s economic environment.
This is reflected in the aforementioned Forrester survey, which shows that four of the top ten elements consumers expect in a loyalty program fall in this category. Loyalty programs have always been focused on financial rewards, and now expectations have expanded beyond just points and miles to coupons, samples, and offers. The survey shows significant portions of loyalty program members listing the following financial rewards as being important to them:
- Instant discounts (68%)
- Points, miles, or other loyalty currency (67%)
- Mobile coupons and/or rewards (58%)
- Free product samples (53%)2
Clearly, the desire for traditional financial rewards remains strong among consumers. Successful loyalty programs are not only addressing this demand, but also providing innovative ways for members to utilize their points and access new rewards.
What’s next – more flexibility and fungibility with financial rewards
Providing customers with more flexible, fungible ways to utilize their points gives them more reasons and ways to engage and get recurring value from the brand. Offering more choice also helps to ameliorate common consumer pain points around reward accessibility and utility. After all, 78% of members feel that the effort required to earn a reward is unreasonable3, and consumers list “multiple options for redemption” as their number one loyalty program need.4
Brands have available ways to increase flexibility and fungibility. For example, allowing members to convert portions of their points into cash or crypto gives them the freedom to spend those points wherever they’d like—whether that means sending to friends, donating to charity, or simply treating themselves. In fact, the same Forrester study found that “transferring rewards to friends” as well as “redeeming rewards for charitable donations” were capabilities that 36% of program members found important.5
Using split-pay functionality is another way to foster goodwill with customers. Under this model, members that don’t yet have enough points to redeem for a reward can instead use a combination of cash and points for the reward. Bakkt® storefronts offer split-pay across merchandise, Apple® products, gift cards and travel, immediately increasing reward availability and incremental spend.
Customers will feel good about rewards they achieve and can choose. The next time they use their new Apple® Airpods to listen to their favorite song, or think back fondly to their family vacation, they’ll remember the brand that helped provide that for them. This is where the value of experiential elements becomes hyper-relevant: your brand is associated with lasting rewards each time the customer uses or experiences the reward.
Brand experiences must be connected across channels
Experiential elements are an equal, core component of a modern loyalty program and drive emotional loyalty. Experiential elements bring dimensions of the memorable and personal, so the customer feels valued and important.
The Forrester survey found that over half of customers listed the following experiential elements of a program as being important – nearly as important to respondents as financial rewards.
- Enhanced customer service (54%)
- Ability to earn special status (52%)
- Personalized offers and reward choice (51%)6
Brands must bring a lot to the table to deliver on these needs: People to deliver on customer service, assets and partnerships to deliver on status, and technology and teams to bring personalization at scale. Bakkt’s approach to loyalty solutions is creating delightful, connected experiences and moments of positive brand interaction, particularly in customized reward options ranging from travel to crypto rewards to Apple® products.
Relevant, personalized redemption options show that your brand understands your customers and delivers the rewards they truly want. Importantly, this synergy leads to increased commerce and ROI. A Mastercard rewards study found that customers who were given personalized offers and rewards spent up to 18% more, and their churn rates decreased by 75%.7
Brand participation is the new loyalty mandate
Finally, beyond financial rewards and experiential elements, members now want to feel like true participants—and even owners—in the brand. Forrester survey data again shows a strong demand for benefits that allow for this kind of valuable brand participation:
- The opportunity to provide feedback to the company (50%)
- Ability to influence development of new products and services (37%)8
So, loyalty members want a voice in the brand and even a vote on how the company moves forward. Modern brands are allowing members to vest and vote on key decisions with an always-on input pipeline – grounded in social and digital marketing capabilities.
Loyalty that lasts
Brands need customers who not only act loyal, but also feel that loyalty on an emotional level. Encouraging members to contribute to the program and brand helps deepen ties and creates a sense of ownership with the brand.
Customers that act loyal without feeling loyal have a purely transactional relationship with the brand; their connection is only as strong as the sustained financial rewards they are being offered, and it can quickly fade if a competitor has a better deal.
The key consideration for taking your program into the future? Loyalty members today want their voices to be heard – both in terms of consumer feedback but also relating to how brands develop future products and services. We call this brand participation.
It’s clear that the loyalty program environment is transforming, and as customers’ expectations also shift, we must all raise the bar in order to create long-lasting, mutually beneficial relationships.