Do rewards create loyal customers?

SmartCompany, August 15, 2017

It used to be a given that you’d get an extra potato cake at the local fish and chip shop. Some of us even began to count on it, ordering two when we wanted three, taking for granted the customer perk that the local fish and chip owner handed out as liberally as they salted your chips.

However, it seems that tradition is slowly passing. What’s happening to these rewards, and can they still create loyal customers?

Chief customer experience officer and strategist at CXA Cos Luccitti said that encouraging customer loyalty nowadays runs much deeper than just offering them a reward for their ongoing patronage.

Rather than focusing just on perks, businesses should aim to create a consistently flexible and pleasant customer experience such as letting customers pay however they want to and without restriction.

“Humans are complex, demanding creatures,” he says. “We like free stuff, but it’s not what bonds us to a brand or business. We want more than that. ‘What problem are you solving for me? How do you make my life easier?’ If businesses can answer that for their customers, their customers will be spending a whole lot more time and money with them.

“Offering rewards should only be used to surprise and delight customers. Giving them an experience that meets their emotional and functional needs is what businesses should be focusing on.”

He said the UberPUPPIES marketing campaign was a great example of how to delight your customers.

“In partnership with local animal shelters, they delivered puppies to your office to play with for 15 minutes,” he says.  “As an Uber customer you felt special because it was a unique experience – even though you had to pay $40 for it.

“At the time (I felt) a deep connection – ‘loyal’, if you will – to the brand because they were offering something truly delightful. Now isn’t that remarkable? Customers feeling loyal and paying you for the privilege!”

Luccitti says it is vital for businesses to know and understand their customers’ needs and finds ways to connect with them.

“Knowing their pain points, passion points, behavioural and psychographic data etc is essential in creating a customer persona identity that can be used to reward at a micro level,” he says.

Dr Kate Adams, founder of online gifting service Thankly, agrees that connection is key to building loyalty.

“Rewards don’t necessarily build brand loyalty,” she says. “What builds loyalty is a connection with your business. And if you’re online and have no face-to-face contact, you have to achieve that connection through personalisation and recognition.”

She said Thankly uses rewards to make customers feel appreciated.

“Rewards enable customers and clients to feel that they aren’t just a number – that they are valued, recognised and they are important,” she says.

“It’s the e-commerce equivalent of offering a hand of friendship to a client or customer and letting them know they are valued. Rewards are a great way to ask people to support you, and 99 percent of the time, they will.”

She says some of Thankly’s rewards for loyal customers include:

* Free overnight delivery for orders over $50;
* Cards and gifts are sent every four months to their top one percent spenders (VIPs);
* A $20 gift voucher is sent to anyone who gives the business a shout out on social media of group forum;
* Customer referrals by email are rewarded with a $10 gift voucher;
* Every customer gets a free handwritten card and gift wrapping for their order.

She says while offering vouchers and rewards can contribute to brand loyalty, there are some pitfalls.

“I’d suggest asking people to ‘do’ something for their reward,” she says. “That might be an Instagram post, a Facebook shout out, referring a friend or even just buying another product.

“Also, you don’t want to be doing too many discounts. Everyone knows that e-commerce store that constantly has 10-20 percent off if you sign up to their email list with a popup.”