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How to Choose Loyalty Program Benefits That Engage Customers

By October 22, 2020 March 4th, 2021 CCG Retail Marketing Blog

Differentiate your loyalty program — and your brand — with innovative, relevant rewards program features that motivate customers to take action.

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Article Highlights

  • A loyalty program can be a strong differentiator for your brand — but not if it only offers a generic list of rewards program features.
  • You can develop a unique list of loyalty program benefits by considering program objectives, customer pain points and your brand pillars.
  • You should include a variety of rewards program feature types, such as hard and soft benefits, plus experiential, target-driven, cumulative and immediate rewards.
  • Quantitative evaluation will help you narrow down your raw benefits list by examining the financial impact of each feature idea.

Eighty percent of American adults belong to some type of loyalty program, according to research conducted by Synchrony Financial.1 In fact, the average person belongs to more than 14 loyalty programs — yet they’re active in fewer than half of them.2 When they are active, though, 86% of consumers say they’re more loyal to that retailer.2 How can you ensure you’re in that select group of stores that truly benefit from a loyalty program? A big part of the answer comes down to offering relevant, engaging loyalty program benefits.

Why You Need Innovative Loyalty Program Benefits

While a unique product or special pricing may bring customers to your stores, they won’t necessarily differentiate your brand over the long term or keep people coming back through your doors. A loyalty program can help you stand apart — but not if your rewards program looks too much like too many others and offers only a bland, standard list of rewards program features. To be blunt, you can’t stand apart if you look like everyone else.

To truly set yourself apart while engaging customers and winning repeat business, you need loyalty program benefits that are relevant and exciting for your customers. How do you find them? Below are a few steps you can take to develop reward ideas that will attract and engage customers, and make sense financially, as well.

Establish Objectives for Your Loyalty Program Benefits

Ultimately, you want your rewards program features to build loyalty, of course. But having other, more specific objectives for each benefit can help ensure that your rewards have purpose and will help support broader goals, which can also help win buy-in from key managers. Keeping objectives in mind may also help spark your imagination when it comes to the next step — brainstorming reward ideas.

Objectives for your loyalty program benefits may include:

  • Attracting new members to enroll in the program
  • Increasing the perceived value of your brand
  • Retaining more customers
  • Encouraging loyalty program members to move up to a higher tier
  • Giving customers a reason to consolidate their category spending with you
  • Driving traffic and sales in general

Brainstorm Fresh Loyalty Program Benefits

With your objectives acting as a guideline, begin brainstorming loyalty program reward and benefit ideas. Don’t be afraid to get creative and be bold. At this stage, you want to create a fat list of potential benefits, so keep an open mind and don’t start eliminating suggestions too soon.

For instance, you might think of a reward, then be tempted to dismiss it because you know you can’t afford to provide that benefit to all of your loyalty program members. But, it may be a benefit you can afford to offer to a slice of your membership, such as your premiere members or new enrollees. So leave it on your list for now.

Below are five steps that can help you develop a lengthy and varied raw list of loyalty program benefits.

1: Consider different benefit types.

Ideally, your list of loyalty program ideas should include rewards from a mix of categories, such as:

  • Hard benefits cost you hard dollars and are tangible, such as discounts and bonus offers.
  • Soft benefits are based on emotion and experience, such as recognition and special services. They may cost less than hard benefits, but could involve more time and effort for your team.
  • Experiential benefits are a type of soft benefit that may make a customer’s life easier, reduce friction in the customer journey or serve up entertainment, such as event tickets. (Learn more about experiential rewards here.)
  • Target-driven benefits drive specific customer behavior to a certain target or goal, such as rewarding a member for reaching a stretch spending goal, writing a product review or trying a new product category.
  • Enrollment rewards entice customers to join your loyalty program.
  • Immediate rewards offer “surprise and delight” and instant gratification.
  • Cumulative rewards are earned through member behaviors over time, such as by accumulating purchases or points. They can be useful in building aspirational momentum.
  • Microbenefits are unadvertised, highly targeted benefits that reward on an individual or micro-segment level. They often fall into the “surprise and delight” category of benefits, but also can be designed to drive particular behavior in that individual customer, such as purchasing a new product.

2: Address customer pain points.

Benefits that help ease customer pain points can be among the most popular and effective rewards program features. After all, who doesn’t want to make their life easier?

Look for friction points in your customer journeys. Review customer service reports to identify common customer complaints. Talk with store managers and other customer-facing employees to learn what customers are saying — and what these team members wish they could do for their customers. Then think about rewards that could address these issues.

3: Get customer input.

Getting staff input is good. Getting customer input is even better. Online surveys, focus groups and other customer research tools can give you an even better view into who your members are and what they value in terms of rewards program features.

One particularly effective approach: Create focus groups consisting solely of people from one customer segment. These discussions will often go deeper than if you have a disparate mix of participants. And you may come out with some really innovative loyalty program benefit ideas that will be highly relevant to this group of customers.

4: Consider customer segments.

Certain benefits will likely appeal more to certain customer groups than others — particularly if you have a fairly varied customer base. For instance, a discount on an REI Adventure trip to Asia may be a highly effective incentive for singles in your Gen Z audience, but fall flat with young families in your Gen X group, who might prefer special pricing on gear rentals.

Looking through the lens of membership tiers can give you yet another perspective for dreaming up new rewards program features — including those that you can only offer to a limited number of members. For instance, you may be able to give early store access to all of your members, but may want to offer advance entry to your annual mega-sale only to your very best members.

5: Review your brand pillars.

What is your brand known for? What’s your store mission? These are promises you’re making to your customers — and one reason your customers choose you over the competition. Developing loyalty program ideas that align with — or amplify —these touchstones also helps ensure that they’ll resonate with your program members.

Examples of Loyalty Program Benefits

The next step in your quest to develop innovative, engaging and effective loyalty program benefits is to hold brainstorm sessions. Use these real-life reward ideas to jumpstart your team’s imagination and help you step off the beaten path.

  • Partnership rewards, such as gift vouchers and other rewards offered in cooperation with relevant, non-competing companies. (Read more about strategic brand partnerships here.)
  • Goodies grab, where a top-tier member can earn the opportunity to grab as much merchandise as they can within a short time period. Typically, it’s most cost-effective for lower-price products.
  • Express ordering or checkout. For example, members of Dunkin’ Donuts DD Perks can add funds to their account to pay in seconds and auto-reload the account, as well.
  • Charitable donations. An increasing number of companies — including Kroger, Southwest and Sephora — are offering their members the opportunity to turn reward points into charitable donations.
  • Choice of rewards. Instead of saying, for instance, 100 points earns a $10 coupon, some companies let their members choose from an array of loyalty program benefits. United Airlines, for instance, allows MileagePlus members to redeem miles for travel, car rentals, merchandise, gift cards, Broadway show tickets and more.
  • Consultations and concierge support. For instance, while Restoration Hardware’s RH Membership Program costs $100 per year, it includes complimentary interior design services, one-on-one consultations with the store’s design team and access to a concierge who can assist with order support and product information.
  • Members-only (or free-to-members) classes/workshops. For example, Lululemon members (who pay $168 per year to join) get passes to classes and events, as well as access to live digital workshops.

Narrow Down Your List of Loyalty Program Benefits

By now you should have a robust list of reward ideas. Since you didn’t say “no” to even the wildest notions, though, chances are you won’t be able to incorporate every rewards program feature from your brainstorm sessions. That’s where objective, data-based, quantitative evaluation comes into play.

At this stage you need to consider the potential reach of each benefit — what share of your audience, or a target segment, is likely to be engaged by this loyalty program benefit? Then look at the revenue impact and cost of each individual reward idea. In other words, what is the benefit of each rewards program feature you’re considering? You can even develop mini pro formas to help objectively evaluate the financial soundness of each potential benefit.

Pick the Optimal Benefits Mix

CCG’s Statistical Loyalty Program OptimizationTM is based on a series of models that leverage multivariate analysis and Total Unduplicated Reach and Frequency (TURF) analysis. It lets us evaluate reach and desirability of multiple rewards program features simultaneously, with a focus on operational efficiency and ROI. In the end, you get objective, fact-based recommendations on the best benefits mix for each of your key audiences. So you can have confidence that your perks will be ones your customers want — and actively strive to obtain.

More Considerations for Your Loyalty Program Benefits

While you’re developing your loyalty program benefits, also consider when and how you’ll offer different rewards. For instance, don’t make all perks purchase-based. Instead, also reward members for completing a member profile, reviewing a product, sharing a brand post on social media and so on. Build in convenience, too — for instance, by allowing members to access their member card and redeem rewards via their mobile phone.

By trying these tactics and enhancing your benefits list, you can grab attention for your brand and your loyalty program — and build ongoing customer engagement, participation and shopping loyalty.

Benefits cost your company money. If they aren’t paying off and driving desirable customer behavior, then they’re hurting your bottom line. CCG’s retail marketing experts have 40+ years of experience helping companies optimize their loyalty programs, including making sure you have the right benefits for your brand and your customers. Schedule a free consultation or call 303.986.3000 today to learn more.

1 “Much Love for Loyalty Programs,” Reuters.com, https://www.reuters.com/brandfeatures/synchrony/inside-retail/much-love-for-loyalty-programs, accessed Sept. 2, 2020

2 “17 Staggering Customer Loyalty Stats That Will Change Your Perspective,” Paul Wolfer, Clarus Commerce, posted March 26, 2018, https://www.claruscommerce.com/blog/17-staggering-customer-loyalty-stats-that-will-change-your-perspective/, accessed Sept. 2, 2020

Sandra Gudat

Author Sandra Gudat

Sandra Gudat is CCG’s president & CEO. Considered a pioneer in the field of customer marketing, she has a diverse background in consulting, database marketing, advertising, retail and business management. She is a frequent speaker on customer loyalty marketing and developing customer-centric policies

More posts by Sandra Gudat

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