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September 13, 2018

How to reward loyalty without points

Jagoda Hryszko
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When you think about loyalty programs, the very first thing that comes to mind is probably the points. It may look like an expensive investment and, ultimately, an architecture for collecting points is only the beginning; you also need to support exchanging the points and integrate a loyalty system with the distribution of rewards.

But what if you skip the points altogether?

In this post, I’d like to show you how you can test if loyalty programs work for your business without an extra penny spent on new infrastructure. I’m going to use regular coupons, gift cards, and customer segments to create a loyalty program. A program which is ready to compete with giant “point's collectors”.

Challenge 1: multi-level structure

People are much more motivated to participate in any loyalty program when they see a clear goal. And they see it’s close. That’s the point of dividing a program into levels. In such dimensions, each customer is always close to some reward. What’s also motivating is that they can see what’s at the very end. Typically, it’s entering a VIP or Premium Group of customers.

Keeping that in mind, it’s important to introduce the entire program structure and send it over to every customer with the invitation to join. How can you model a structure without points? Let’s take a look at the list below.

  • Customer segments based on total order amount and number of purchases. The segment’s criteria defines “loyal” customer and divides them into different “loyalty levels”.
  • Automatic distribution of personalized emails which deliver rewards such as discount coupons and gift cards.
  • Each email contains a simple graphic which informs them about their achieved level.
  • Rewards have their unique codes to enable customer tracking and measuring of program results.

To start with, you need to define a profile of your loyal buyer. Usually, brands take into account total spent amount and total number of orders. In this post, loyal customers need to spend at least $300 to get an invitation to join a loyalty campaign. Moreover, to achieve the next levels, this initial amount needs to grow.

  • Invitation to join with 20% discount on the next order – for the segment of customers who spent at least $300 in the last six months.
  • Level 2: 30$ gift card – for the segment of customers who spent at least $500 in the last six months.
  • Level 3: 50% off the next order – for the segment of customers who spent at least $600 in the last six months.
  • Premium Group - a segment of customers who spent at least $1000. Rewards for the Premium group can be a regular 20% discount, valid for 1 year, and occasional gift cards for special dates and holidays.

Challenge 2: rewards

The power of coupons and gift cards lies in their flexibility and tracking possibilities. They can be tailored to the needs of a particular customer, wrapped into a personalized message, and finally, tracked through their entire lifecycle. This tracking is crucial for managing a program with dynamic levels. You need to know if customers redeem their incentives, analyze order history, and get clues for future improvements. Ultimately, every detail counts. It can be a channel, type of incentive, time limit, or even a subject line that makes one segment grow faster than others. Counting redemptions and measuring performance on each level shows which configurations work best.

Challenge 3: keep the wheels turning

The biggest challenge is to keep customers involved after achieving a certain level. There is a risk your client redeems a reward (or not) and then forgets about moving forward. This is a scenario you don’t want to repeat. The program should be a gamified journey with a narrative in the background so that the clients are kept informed about where they are, and how close it is to the next reward

Partly, all of that is provided by levels. The second important thing is the incentives. They need to be worth coming back for again and justify spending more. Last but not least, customers should be kept up-to-date about progress to the top of a loyalty ladder and the distance separating them from the next reward. In this example, I’m going to put this information into personalized emails. Why emails?

"Emails that make the recipient feel like you’re talking directly to them are always a good bet. The personalized approach makes your target audience feel valued and connected while still delivering content that furthers your marketing goals and eventually, sales goals." MailMunch


A simple graphic inside an email gamifies the customer experience and gives the motivation to move forward. Ultimately, the point of every game is to finish it, right?


Challenge 4: automatics and scale

Don’t even think about doing it manually. Automation is a must in any gamified loyalty program. In our example, customers spend money and join matching segments which makes sure all of the levels presented by customer segments are dynamic creatures. Moreover, each time someone enters one of the loyalty segments, an email with a particular reward needs to be triggered to their mailbox. That is what your system needs to cover.

Summing up, you need the infrastructure ready to:

  1. Track and store customer data.
  2. Build dynamic segments based on total spent amount.
  3. Trigger automatic emails in response to joining a segment.
  4. Create personalized emails with custom design and graphics (or at least integrate with your email provider).
  5. Generate rewards with unique codes such as gift cards and coupon codes.
  6. Track every code and validate before redemption.
  7. Equip your rewards and program with budget-based rules, time limits, etc.
  8. Support more than one distribution channel to enable a true cross-channel experience for your customers.

Having all that in place, you can create a truly gamified journey for your customers. It’s a myth that you have to invest in a solution dedicated to loyalty programs. The aim of running such campaigns is to distinguish your loyal and most profitable customers and turn them into faithful brand advocates. This is the very first thing that should come to your mind when thinking about loyalty programs.

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At Voucherify, we are developing coupon, referral, and loyalty solutions for businesses of every shape and size worldwide. If you’re interested in having a consultative talk to help you decide how you should implement your loyalty campaigns, let us know at sales@voucherify.io — We’re always happy to help!

Tagged:
customer loyalty
,  
promotional psychology
,  
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