Rewards Program: Why coupons and discounts aren't enough
Learn how to optimize Rewards Program, creating meaningful and engaging experiences.
A loyalty program is a powerful tool used by businesses to encourage repeat purchases and other favorable behaviors from customers. While traditional rewards include discounts, free products, or points, today's users seek a more personalized and meaningful connection with their loved brands.
Moving from Functional to Meaningful
The UX Pyramid offers a strategic approach, starting with the foundation of a Functional Product that prioritizes core features. It then advances from a practical user experience to the most relevant. At the top of the pyramid is the Meaningful Product, emphasizing emotional, social, and ethical dimensions.
Crossing the chasm of convenience is essential for a consistent experience. To create a genuinely meaningful product, it's crucial to go beyond the basics. This means considering the broader user experience, including emotional and ethical aspects. And what does all of this have to do with the consumer’s satisfaction with benefits and advantages? Because generic discounts aren't enough, brands want to be memorable and the first choice consistently.
Exploring rewards types
Rewards programs are given to appreciate customers for sticking with a brand or service. These rewards come in various forms, including discounts, free products or services, exclusive access to events or content, points or miles accrual for future benefits, and personalized offers. Well-designed loyalty program rewards not only provide tangible benefits but also contribute to creating a positive and memorable association with the brand. According to Reforge, there are other types of benefits that can be explored, Extrinsic, Intrinsic, and Social Rewards.
Extrinsic
Extrinsic rewards serve as external motivations to enhance user engagement and loyalty in various platforms and services.
Time: Highlight time savings from product use.
Money: Encourage user referrals with incentives like Member Get Member programs.
Information: Reward subscribers with reports or documentation, educational platforms normally work with some content as a reward.
Intrinsic
Intrinsic rewards are related to users’ internal motivations, fostering a deeper and more fulfilling connection with products and platforms.
Completion: Receive feedback upon completing missions or when finishing a task.
Mastery: Achieve new levels in games, or tiers, become an expert in some subject, or be a part of a VIP group.
Surprises: Delight customers unexpectedly for added enjoyment. Using Prize Wheel, Occasional Benefits, e.g: Free Shipping Days. Using location technology, to invite loyalty program members when they come within close proximity of one of your stores.
Social
Social rewards elevate user experiences by promoting a sense of community, acknowledgment, and achievement within the platform or service.
Recognition: Award badges and share recognitions on Social Media, Platform Reviews, and Communities.
Competition: Notify updates on leaderboard positions or inform them of a percentage achieved that only a small user group has attained.
Understanding reward frequency
Reward frequency refers to how often rewards are provided to individuals within a given context, such as a loyalty program, gamified application, or incentive system. It quantifies the regularity with which users or participants receive positive reinforcements for their actions, interactions, or achievements. A high reward frequency implies more frequent and consistent rewards, while a lower frequency may contribute to a sense of rarity and increased perceived value for each reward.
Types
Continuous: Users receive a reward every time they act, but this can become less exciting over time. E.g: Accumulate points in every purchase.
Fixed Ratio: Rewards are given after a fixed number of actions. E.g: Accumulate points for every third purchase.
Fixed Interval: Rewards are given based on time intervals. E.g: Accumulate points every week.
Variable: Varies according to the user's behavior, seasonality, or the behavior one wants to encourage. E.g: Gifts on Holidays or when completing a specific time as a user in the platform.
Increasing rewards potential
Elevate the potential of your rewards by diversifying their types and quantities, ensuring timely and unpredictable delivery for sustained engagement, and enhancing their perceived value. By focusing on Variety, Velocity, and Value, you can create a more impactful and meaningful experience for users through your rewards program.
Variety: By offering more – both in quantity and type – you can ensure a diverse and plentiful reward program for your customers.
Velocity: Speed up the delivery of rewards, reducing the interval to reinforce positive reactions. Keep things interesting and engaging by introducing variability with unpredictable rewards.
Value: Make your rewards more impactful by increasing their significance and value, ensuring a deeper impact on users.
Consider developing a portfolio of rewards that meet your customers' specific needs and interests. Strategically plan the timing of these rewards by incorporating them into established routines and product rules. This approach ensures that the rewards align with what customers find interesting and when it best fits into their schedules, enhancing the overall experience and effectiveness of the rewards program.
Key takeaways
Connect emotionally with customers
Make products more than functional by forming emotional connections with users through personalized interactions.
Create meaningful experiences
Build loyalty beyond convenience; offer an experience, not just a product.
Diversify rewards
Optimize loyalty by considering the value, variety, and velocity of the rewards.
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