The basic premise of a rewards program is not new; buy X, get Y points, redeem Z reward. However, a shortcoming of this approach is the oversaturation of these programs. Research by Capgemini suggests that 90% of customers have a negative perception of loyalty programs and around 54% of them are inactive. Customers have a high level of expectation for being rewarded for being loyal. Research suggests that customers are twice as likely to spend more on brands they are loyal to than those without an emotional connection.
The new era of affinity
Around 28% of customers abandon rewards programs without redeeming any points, this suggests that people have become accustomed to and have stopped seeking out rewards programs that offer points and discounts and that a new era of affinity is upon us. The average consumer signs up to multiple rewards schemes however is only active on around half of those. Customers want more from their favourite programs other than standard rewards. When it comes to investing in customer’s emotional wants and needs, brands need to dig deeper and do better.
Going beyond archaic methods
With the advent of the pandemic and the realignment of brands to a slower, more ecological way of production, there also needs to be a shift in the loyalty sphere away from archaic schemes that do not add value to the life of the end consumer. Most rewards schemes offered are static and predictable, which leads to customers playing the field looking for better deals to spend their money on. Getting to know your customers on an emotional level does not only include their names, emails and phone numbers but also their likes, dreams and aspirations. Establishing such connections requires a new way of thinking and a rearrangement of what companies define as the ‘why, what and how’ of reward schemes.
A shift in consumerism mentality
As mentioned previously, customers are more conscious of their footprint and of the ripple effects that their consumerism has on the environment through wastage and carbon emissions. This has in turn contributed to customers putting pressure on their favourite brands to align with causes and start supporting those that are important to them. As a result, many brands are taking a different, more ‘human’ approach to their rewards schemes. A number of major fast fashion brands have embedded sustainability into their business model such as H&M and Zara with their ‘Join Life’ collection. Customers are reassured of their commitment to lowering their carbon footprint, waste reduction and reusing and recycling items.
Businesses need relationships to thrive, empathy is essential to build these relationships in order to create repeat customers. It’s a no brainer as to why companies focus on customer retention than customer acquisition, repeat customers spend 67% more on purchases than first time customers. Utilising empathetic marketing means that your client is at the heart of your operations. This style of marketing focuses on understanding who your customers are and taking a more human approach on things. In a world where there are endless options to choose from, people are willing to search for and select a brand that aligns with their beliefs. Moreover, they want to support businesses that support them in return.
Out with the old and in with the new
Another aspect foreseen to change the rewards space is paid rewards schemes. Paid reward schemes have the potential to increase engagement and spending. Customers pay for the privilege and exclusivity of joining a brand’s rewards scheme, it’s success can be seen with Amazon Prime. Similarly, the subscription market is also becoming popular.
How Loyale can help
Investing in an intuitive rewards scheme like Loyale will enable you to disrupt the shopping experience of today. Minimise your risk of falling behind in the quest to earn and preserve valuable customers. Loyale can give your company a competitive advantage. Learn more about Loyale and what your brand can do in this new era of rewards schemes.