For many brands, rewards mechanics are a starting (and end-) point. They simply offer points, tokens, or miles for your spend. For me, this should rather be perceived as a cherry on the cake. It is essential to complete the effect. But before you put a cherry on the top, be sure that you have a lovely cake.
As these brands are focused on customer spend, they amplified the transactional relationship with the brand (spend more, get more). But it takes time to get real value. Therefore, this model promotes high spenders and can be disengaging for occasional customers—the bar is set too high. In this „one size fits all” approach, they hardly secure every customer cohort journey.
By joining your brand, customers sign the contract with you and their data is the currency—information about who they are and what they like. In reverse, they should have a good understanding of what value they can get back from you.
By giving your members essential and relevant reasons to engage with your brand, you can also influence their behaviours and boost your customer lifetime value.
After all these years, customers are aware of the value of their data. You want your customers to feel special. You want the to know that there is always something especially for them. No matter who they are, how often they buy, they can enjoy a special treatment beyond the discount or good deal on the cash register.
Whenever I was on the globe, I always heard: „But our customers are different, and they really like the special offers and discounts”. Surely, they are! Price sensitivity can vary, but people, in general, like good deals. This is why you shouldn’t forget about them in your mix—it opens their wallets, but not necessarily their hearts. Discounts are good mechanics for member acquisition, but, in the long run, it works only for a narrow group of your customers. Transactional relation is always superficial, as there is always someone in the market who can offer a similar product cheaper than you. All your investment in your gross margin evaporates with the customer.
So it would help if you balanced your offer with other benefits, like a virtual receipt, better access to the services, more favourable warranty conditions, price guarantee, more extended returns period etc. This range mix supports the different customer groups and positively impacts your profitability, as many of these things don’t cost you a thing.
In building the right value proposition, sky is the limit—it depends only on your imagination. But while creating the offer, it is reasonable to ask yourself if it delivers these two objectives at the same time:
- sales growth—how much more your members will spend;
- engagement growth—how much more your member will interact and identify to gain more data and insight about them.
Thanks to that, your programme may become a growth engine and relationship generator, both at one time.