Driving Growth and Engagement: The Power of Loyalty Reward Strategy

In today's business world, competition is even tougher than ever before. Building customer loyalty is certainly one of the most important ways to gain a competitive edge. This can be achieved through a wide range of methods. One you should really focus on is designing reward strategies that make customers more engaged and connected to the brand. From this article you will find out the most common mistakes and learn how to create a successful and profitable reward strategy.

Why are reward strategies so essential to your business?

Reward strategies are just one component of complex loyalty programs. However, they are one of the most efficient ways to build customer loyalty.  They involve offering individual rewards to customers for reaching specific thresholds. These programs encourage customers to buy more frequently, remind customers of the brand and build buying habits associated connected to it. As a result, these strategies make the brand a more frequently present in the customers' minds as well as in their lives. All of these elements result in creating customer which translates into:

• increased customer retention - loyal customers are more likely to return to a brand
• higher customer lifetime value - by maintaining engagement, customers spend more during a single purchase, which translates into greater profit for the brand overall.
• increased brand advocacy – engaged and loyal customers are more likely to speak about the brand and may recommend it to their friends or family.

How to design a Reward Strategy

Customer loyalty can be achieved in many ways. An omnichannel approach and the use of multiple technologies, as well as creating a narrative and building an emotional connection with the customer are both useful for this purpose. Which factors of creating customer loyalty can be used when designing reward programs?

• Personalized experiences & exceptional customer service - this is the most important feature of creating emotional loyalty, making customers feel valued and appreciated. Reward programs should enable personalization, e.g. by choosing dedicated rewards for each customer based on their past behavior and preferences and the products they buy.
• Incorporating gamification in order to provide a clear indicator of progress - creating big goals that customers achieve through small steps will simultaneously maintain both instant and constant gratification.
• Emotional branding – it is a good idea to create a brand character that will appear in the campaign and guide the user through its various stages. You should also remember that the brand should both have a mission and a story that the customer can relate to.

Reward programs are just one tool that can be used to create customer loyalty. However, it is significant as it allows you to combine two types of gratification, so that the customer becomes attached to the brand on the everyday basis and creates habits related to it.
 

What to avoid when developing a reward strategy?

Creating reward programs is a challenging task. While this tool can bring great results and translate into greater income for your business, it is worth remembering that there are many steps along the way that can go wrong. What are the most common mistakes? According to Katarzyna Kulczycka, Senior Strategic Consultant at Comarch, one of the biggest misconceptions in creating such strategies is that companies set too high thresholds that make rewards seem unattainable:

The idea that those loyalty program owners are having is that if they have only high value rewards in their program, they will be able to keep customers loyal for longer

Another common mistake is that brands ignore customer preferences. As rewards, companies often offer mismatched benefits that don't interest customers at all. To avoid this, you need to do research and investigate what they care about most. From the customer's perspective, the sense of empowerment that comes when the customer feels heard is also important. To achieve this, you can allow them to choose a benefit that will better meet their needs.

An additional problem is that the rewards are not differentiated enough. As a matter of fact, they are often generic and trivial. Such rewards should be simple to achieve and relatively frequent, but that doesn't mean they can be unoriginal and boring.

Katarzyna Kulczycka also mentions that:

In order to keep your customers happy and make them feel appreciated, we need to set the threshold for rewards low and to make rewards available to as many customers as possible.

A good solution is to provide customers with fast and easy rewards for their daily purchases. They can receive a simple but meaningful reward for them, such as discounts that can be used on future purchases.

However, it is important to keep in mind that too many thresholds are not a good thing either. An over-complicated program with too many conditions to meet can cause customers to lose understanding of what and how they can gain, and as a result they may become discouraged. Therefore, it is worth to monitor the effects of the campaign - analyze the rejection rate at each stage and make adjustments on an ongoing basis.

Reward programs  - boost your customers’ loyalty!

Nowadays it is absolutely necessary to look for all possible ways of gaining an advantage over your direct competitors and building a good relationship with customers. One way to achieve this is undoubtedly through loyalty reward programs.

When setting up reward programs, remember to set realistic thresholds for your customers, which will prevent users from getting discouraged and ensure that they see progression as often as possible. It's also a smart idea to make sure your rewards are tailored to meet your customers' direct needs. 

If you want to take your reward programs to the next level, then check out Comarch Loyalty Marketing Platform, which will help you build better relationships with your customers and gain a competitive edge.