Customer Experience News & Trends

5 rewards that make your loyalty plan look boring

If your loyalty plan includes small discounts and coffee mugs, customers probably find them boring. So it might be time to think about sprints for cases of beer and opportunities to punch, arm wrestle, or date the owner.

Those are the kinds of rewards businesses are coming up with to inspire customers to come back again and again. Businesses are responding to two things: 1) Customers are getting bored with a free cup of coffee after 15 purchases, and 2) an inability to keep up with the kind of luxury rewards hotels, airlines and department stores can offer.

And why shouldn’t small businesses concoct loyalty plans a little off the beaten path?

Customers are more than willing to be loyal — and they want to be rewarded for it with a great customer experience and a loyalty plan — even a wacky one, if given the opportunity.

The buzz is on

So non-traditional loyalty plans are popping up across industries — and they’ve created customer followings and buzz. While many are still grassroots efforts, third-party vendors are making it possible for smaller organizations to offer cutting-edge loyalty plans — no more punch cards and passbooks.

And the rewards … well, those are as wild as the business leaders’ imaginations.

Some examples:

Beer and chips

Shopping sprees are nothing new. Grocery chains have offered them as prizes for contests since the mid-1900s. But they’ve taken on a new meaning and intrigued a new generation of customers.

Take loyalty program at the Washington D.C.-area convenience store FoBoGro for example.

Loyal customers can accumulate enough points to win a 30-second shopping spree at their favorite FoBoGro store. One winning customer hauled off a basket full of craft beer and chips — the makings for a party to celebrate his loyalty. Another legendary customer hoisted seven cases of beer out of the store in his 30 seconds.

Founder Devlin Keating had used a card-based loyalty program and struggled to get customers to participate. Yes, they signed up after some cajoling from a clerk. But they didn’t participate much — a problem that plagues many businesses. In fact, most people are enrolled in about eight loyalty programs, but participate in less than two-thirds of them, the Maritz Loyalty Report recently found.

So Keating went to a third-party provider that equipped his stores with eye-catching tablets at the registers where customers check in during each visit for a fast five points. Keating gets to pick his rewards and the level customers must achieve to get them.

It takes a lot to top his creative rewards so far:

  • a fist bump for 15 points
  • a date with his colleague and co-founder, Kris Hart, for 250 points, and
  • a chance to invent a sandwich and have it on the menu for a week for 500 points.

For the record, no one has cashed in on the date, but some bad sandwiches have made it to the board and sold.

Of course, this system and its non-traditional rewards may not work for every type of business. But the energy it has created is an inspiration. If customers can smile, laugh and tell a story about their experience, you can bet they’ll tell others and come back for another memorable visit. So whether you’re a B2B or B2C, when creating loyalty plan rewards, try to make them storytelling-worthy.

Buzz cuts

At Red 7 Salon customers get their hair cut, coiffed, colored and contoured. And if they’re really, really loyal, they get to take the clippers to the owner’s head.

That’s a big prize in the Illinois-based salon’s loyalty plan. But it’s not the biggest reward for staying loyal. The real reward is the customer experience, which owner Jason Hall has made the cornerstone of his business and loyalty plan.

Customers get some kind of added-on service with nearly every visit — perhaps a glass of wine or a cold beer or a soothing hand massage with a hair service. The shop’s customer relationship management (CRM) system also allows Red 7 Salon to reach out to customers when they’re due for another service, just in case they forgot to schedule an appointment.

But the most personal touches happen when front desk employees act like concierges. For instance, if customers express an interest in having lunch, they offer some suggestions on where to go. If others are talking about making plans for the weekend, the employee might pull up information online about an event and print it out of for the customers.

So the rewards are part of the journey, not just the destination. While customers accumulate points — and make their way to giving a military-style buzz cut — they enjoy the experience. Every loyalty program should be part of the overall customer experience plan with processes and rewards — formal or informal — given to customers along the way.

Punch to the gut

Some loyalty programs may cause organizations to take a small hit upfront — perhaps by losing a little money by giving customers an immediate reward. But they end up earning much more profitable loyalty in a shorter amount of time than if the loyalty program didn’t exist.

Then there’s at least one organization that takes a hit — literally — in the long-run. The owner of AlleyCat Comics, Nicholas Idell, lets customers who’ve earned the most points punch him the gut.

But most customers don’t go for it, opting instead to cash in on free back-issue comic books, free graphic novels or the right to pick the movie for the store’s movie night.

We’re not saying your CEO needs to wear body armor in fear of a loyal customer cashing in on a wacky prize. But loyalty programs should involve some risk for organizations, too. Customers want to see that you aren’t just trying to lure them in for another purchase. Show them that you’re willing to give up something to win their loyalty (like any good relationship). Include “stretch rewards” that require your organization to put its neck out — perhaps a high dollar item or donation made to a loyal customer’s charity of choice in his or her name, a special event, or an opportunity to do something out of the ordinary with notable figures in your organization. (Did someone say skydiving?)

Stake in the company

Many loyal customers grow to be raving fans and advocates for the brand. And they might rightly deserve an interest in the organization.

At least, that’s what New York’s Bagelsmith owner believes. Customers who earn 75,000 reward points — and it takes an enormous number of visits to reach that level — can arm wrestle the owner for equity in the store.

Strong arm or not, this kind of reward creates a growing interest in the product, brand and organization.

Reward programs that include a small percentage back on company profitability aren’t unheard of. After all, as company revenues increase, investors stand to make a profit. And a plan that pays out to its most loyal customers is bound to spark word-of-mouth and increased business well worth the investment.

Loyalty fees

Loyalty plans don’t need to be all give, no take. Customers who pay to be members of loyalty plans are often the most profitable.

In fact, customers said that being part of a loyalty plan — even if they had to pay to be members — would increase their visits or uses of the organization by 35%, found the recent Loyalogy LoyaltyPlus survey.

One caveat: It’s almost always best to reward customers for paying for their loyalty membership — especially since 50% of customers in the Loyalogy research said they’d pay for membership if it presented a clear value for them. So many organizations — such as Landry’s, which is the parent company of several restaurant chains — give customers reward dollars in the amount equal to the sign-up fee.

For the $25 Landry Select Club fee, new loyal customers get $25 worth of food at McCormick and Schmick’s Seafood and Steaks or Morton’s The Steakhouse.

Not flashy or too wacky, but just enough incentive to encourage sign-ups.

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