Types of rewards that keep your members loyal
In our “post-pandemic”, inflationary economy, loyalty programs have enjoyed something of a renaissance—and multiple factors are driving this resurgence. First off, and perhaps most intuitively, inflation has caused consumers to seek out more value from their pre-existing brand relationships. According to Modern Retail, 43% of customers use discounts to afford their favorite brands.1
However, the old ways of designing loyalty programs are no longer as effective as they once were. The days of one-size-fits-all transactional reward programs that offer value only to the top 10% of customers are increasingly insufficient to drive profitable and sustainable customer loyalty—especially at a time when more consumers are relying on loyalty programs to complete their purchases. While points and miles-based programs have a long history of rewarding best customers, those customers are increasingly demanding experiential rewards, more flexible and fungible reward currencies, innovative reward options, and increased personalization.
The real magic happens when brands can fulfill these changing expectations by providing redemption categories that blend the transactional and the experiential. Enter Bakkt's Apple® Rewards—a loyalty product that engages both drivers of long-term customer loyalty.
Transactional vs. experiential rewards
Psychologists have long known that our choices as human beings are driven by a combination of rational “higher-brain” decision-making and emotional “lower-brain” reactions to fight-or-flight stimuli. Similarly, well-designed loyalty programs have long appealed to both sides of consumers' brains by offering rewards and recognition in two broad categories:
- Transactional rewards: These appeal to the rational side of the consumer brain by putting money in their pockets. Sometimes referred to as “hard benefits,” transactional rewards offer something for free. Program members might earn points or miles that can be redeemed for free or discounted flights, hotel stays, merchandise, or gift cards. They might earn cash-back rewards they can spend on essentials or save up for more aspirational purchases. Transactional rewards build loyalty by delivering real economic value to their program members.
- Experiential rewards: Also referred to as “soft benefits,” experiential rewards help program members feel recognized and valued for their loyalty. Members might enjoy discounts or preferred pricing unavailable to non-members. They might unlock tiered benefits that reward them with special perks and privileges. They might even earn access to free or discounted spa days, concert tickets, sporting events, or restaurant reservations. Experiential rewards help build emotional loyalty by recognizing best customers, making them feel like insiders, and helping them create memories that can last a lifetime.
Many loyalty programs stop at delivering transactional rewards only. But transactional rewards are relatively easy for your competitors to match, and their ability to motivate profitable behavior changes lessons over time as customers come to view them as entitlements. That's why the most successful loyalty programs often deliver a combination of transactional and experiential rewards. But how can brands deliver the most effect mix of rewards without breaking the bank?
New pathways to emotional loyalty
The “entitlement factor” is becoming an increasingly large bone of contention with consumers, who are searching for an emotional connection with their favorite brands. According to a recent Cap Gemini report, 86% of consumers with high emotional engagement say they always think of the brands they are loyal to when they need something.2 At the same time, a recent Antavo report found that only 21% of loyalty program owners classified their programs as being more emotional than rational; 54% of those same companies planning updates to their programs intend to include more emotional elements in the future.3
But true experiential rewards can be an expensive way to build emotional loyalty. Fortunately, loyalty program operators are discovering new ways to deliver experiences that build those emotional connections. Marketers can now lead customers toward increased program engagement by introducing new reward options and by broadening program focus beyond the top ten percent of members. Some of these new pathways include:
- Currency fungibility: Mobilizing currency and commerce with tight integrations and seamless experiences for shopping and paying with points, miles, cryptocurrency, and other digital assets.
- Innovative reward options: Creating unique and compelling moments of interaction through multiple channels that also reinforce the value of the brand.
- Personalization: Leveraging zero- and first-party data to increase relevance and conversion through personalization across loyalty rewards and offers.
- Connected partnerships: Driving value through marketplace-like partnerships and through the end-to-end loyalty lifecycle.
- Web 3.0: Transforming the loyalty experience into new digital spaces to drive community and commerce.
- Gamified experiences: Increasing the number of interactions and ways to engage through game mechanics and milestone goals.
Taken together, these new pathways to engagement offer marketers ways to deliver experiences and drive emotional loyalty without relying solely on expensive travel and event rewards. If you can deliver a reward that operates along multiple pathways simultaneously, then you've hit a home run.
The power of Apple
Apple Inc. is one of the world's most successful brands, with tens of millions of loyal customers purchasing Apple products and services. Apple customers don't buy iPhones, iPads, Apple Watches, and AirPods just because they like the hardware; they're simultaneously joining a growing, sprawling, integrated network of software and services that allows them to unlock more value with each investment they make in the Apple ecosystem.
For Apple Rewards, Bakkt® has partnered with the iconic brand to bring an authentic Apple shopping experience to members of new or existing loyalty programs. Program operators can easily integrate Apple Rewards into their existing redemption journey. The resulting white-label storefront experience mirrors the Apple branding and customer experience while connecting seamlessly with your program platform.
Most importantly, Apple Rewards provides a cost-effective way for loyalty program operators to offer experiential rewards that deliver true emotional engagement. By integrating Apple Rewards into their program redemption experience, brands can engage their members with rewards that operate on multiple levels and fulfill the needs of today's program members.
Apple Rewards offers:
- Currency fungibility: Apple Rewards' split-pay capability allows members to purchase Apple products with a combination of cash and reward currency. This capability aligns with how today's consumers want to redeem for awards—through a quick path to relevant value that benefits more than just the top 10% of members.
- Innovative rewards: Apple Rewards offers members over 2,000 Apple products to choose from, new product releases available within three to five business days, and free Apple Media product trials. With this wide variety, program members can enjoy reward options unavailable from traditional points-based or cash-back loyalty programs.
- Personalized experiences: Thanks to the Apple ecosystem of interconnected devices, add-on services, and media options, loyalty program members can design the Apple experience most relevant to them and their families. The high aspirational value associated with Apple products creates “sticky” relationships that will fuel the earn-and-redeem cycle for your best customers.
Most importantly, Apple Rewards offers program operators the ability to fund rewards that operate on both the transactional and experiential levels. Ultimately, when a loyalty program provides members access to a brand and ecosystem that they love, those customers will be reminded of the brand each time they use the Apple product or service.
Traditionally, only the highest-end travel rewards have been effective at delivering both transactional and experiential drivers of profitable customer behavior change. With innovative reward products such as Bakkt's Apple Rewards, brands now have a new set of tools to help them build customer loyalty that lasts a lifetime.