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The Future of Loyalty Rewards – 5 Currencies Beyond Points

So, you’ve got a loyalty program?

….*cue Shania Twain*, ‘that don’t impress me much!’ 🎶

In 2021, the mere existence of a loyalty program won’t guarantee loyalty. If it did, every man and his dog would have one, right?

In today’s consumer market, loyalty is earned, not bought – not by dangling the loyalty rewards carrot in front of your customers, but by taking an approach that evolves your brand beyond transactional rewards, to emotional rewards.

Ask yourself, how many times have you been heard this value proposition while checking out in-store? 😂👇

So your loyalty program is Brad Pitt?

Too many retailers think of their loyalty programs like pokie machines. Money in, loyalty out…every 10 spins or so if you’re really lucky.

We need to be looking at loyalty like a loving relationship (creepy? …maybe) where you take time to get to know your customers, who they are and what they like, and reward them how they personally like to be rewarded.

Because need we remind you, customer loyalty pays off big time! When it’s done right…

In this blog, we show you how to evolve your loyalty program from one that is strictly transactional to one that is emotionally driven and leaves a lasting impact on your customer.

Wait, is transactional loyalty dead?

Hold your horses! Transactional loyalty isn’t dead.

Monetary rewards still play an uber-important role in your loyalty strategy – in fact, it is one of our all-important currencies of loyalty. However, the tides are changing and customers seek more from your loyalty program.

When developing a loyalty program you want to go beyond points into something that is meaningful and personalised.

This brings me to the 5 currencies!

The 5 Currencies of Loyalty

Before we get into it, this model has been inspired by a blog shared by Adam Posner on his website – The Point of Loyalty. Check that out here!

What we have here is what leading loyalty experts know to be loyalty currencies that range from transactional to emotional. Consider them not as phases of loyalty maturity, but as unique ways people like to be rewarded.

Image credit: The five currencies of best-in-class loyalty programs

Why do we need all five, you ask? Well, first of all, if you’re just transactional, you might be burning cash which doesn’t necessarily mean your customers are loyal, they might only be into you for your money.

Unless you’re Geoffrey Edelsten, that to me doesn’t sound like a healthy relationship… I mean, don’t you want customers who connect with your brand beyond discounts?

Loyalty and CX are aligned for industry leaders, therefore this is where you should be aiming to get to… which leads me to my second point, no two customers are the same. It’s important that your program takes a holistic approach to reward your loyal customers in new and exciting ways.

These 5 currencies make up some of the personalisation levers you can pull when revamping your program or initiatives.

Currency #1: Money

Money Currency Giphy

Do you know there’s such thing as professional coupon-ers? Yep, some people really do go mad for a discount!

Our first, and perhaps the most obvious currency, is money. Aka a direct financial form of gratitude from brand to consumer.

Financial rewards could include…

  • Points
  • Coupons
  • Bonus % off
  • Vouchers

Monetary rewards are a surefire way to encourage transactional behaviour – making customers more likely to spend more, more often.

Unfortunately, there is little to no emotional connection created by this loyalty currency. Discounts and dollars off don’t exactly pull on the heartstrings, you know!

Nevertheless, monetary rewards remain a deeply embedded expectation and will act as a gateway to welcome a new customer into your loyalty programs.

By observing the purchasing behaviours of your particular consumer audience, you can avoid wasting money on unnecessary discounts. Because, well,…

In 2020 allone, Aussie retailers wasted $11 billion on unecessary product discounts…yikes!

Smart Company

Example

Cotton On Perks program image

Cotton On Perks not only gives their new members $10 for signing up but for every dollar spent you receive 1 point (100 points = a $10 reward).

It’s not like some brands where you have to sell your soul for 2 points that will never equate to any real reward. 100 points is totally achievable, especially when coupled with birthday rewards and other perks.

Currency #2: Memory

Relaxing in the pool image

When was the last time a brand did some unexpected for you? Like really delivered an experience that was entirely new and novel?

I’m sure at least one or two come to mind. And let me guess, you told your friends, gloated to your Mum, maybe even left them a 5-star review?

Creating a memory is key to customer retention.

If consumers can easily recall an exciting experience with your brand, the likelihood that they would form a loyal bond with them is much higher.

Memory is your stepping stone between transactional and emotional connections.

Experiential benefits could include:

  • Free cleaning with a car service
  • Your signature brand scent in-store
  • Free samples of bonus gifts in their order
  • Gift wrapping
  • A nice note or funny joke inside their package
  • A video message from Kanye West

As a result of a positive experience, you will find that the ability to cross-sell and up-sell increases ten-fold.

This currency is most effective when used as an exclusive perk of your program and goes above and beyond what your competitors are already offering.

Example

Mercedes Benz driving events experience image

Mercedes Benz offers their customers an exclusive opportunity to get behind the wheel of their luxury car models. These Driving Events create a sense of exclusivity and community for loyal customers of the brand.

Currency #3: Time

Time currency image

Do you love waiting in lines for your order?…Of course not! Who does?!

The currency of time is about taking a load off for your customers. Providing perks that save them time, brainpower and sanity.

Think of it like a loyalty program that’s also a day spa….that’s ALSO a RoboVac. Who doesn’t love convenience?

Functional currencies include:

  • Save checkout credentials
  • Subscriptions for frequently repurchased items
  • Free express shipping
  • In-store queue skip

Functional rewards make your customers feel recognised and appreciated. Like a mate that lets you skip the line or your local barista that knows your order by heart. They just make life, and shopping, so much easier!

Example

starbucks rewards app image

This example from Starbucks shows both what not AND what to do with time rewards.

You see, their old school retro punch card loyalty system really backfired when queue wait times went through the roof. Why? Well, these smarty-pants customers were splitting up the payments of individual items in order to get more punches.

Upon realising this, the company developed an innovative app that took all the working features of the previous system and made it time-efficient and user-friendly. Allowing users to order ahead, order again and set up automatic payment options. Resulting in a reduced wait time in store for all.

Rule #1: Don’t make people wait for their morning coffee!

Me

Personalisation giphy

If you have ever been gifted a Lynx Africa gift pack five Christmases in a row, you would understand the importance of personalisation in rewards 😬

Using your owned (1st Party) data to create personalised communications, experiences and benefits is the crème de la crème of customer loyalty programs.

True personalisation within your loyalty program will take time and dedication, but once you’ve mastered the data the opportunities are endless.

For example, you could offer personalised rewards to the higher tiers of your program, making customers feel seen and superior.
And when these higher tier benefits are customised to their shopping behaviours? Chef’s kiss 😗👌

Shoppers today expect loyalty rewards to be tailored to them and this demands careful, strategic use of your data.

Personalising your loyalty program could involve creating benefits based on their shopping behaviours, choice of reward or ability to decide how their points are collected.

Example

Marriott Hotels rewards program image

Marriott Hotel’s well-established customer loyalty program, Marriott Bonvoy Benefits, allows guests to choose how their points are collected and spent throughout the franchise’s partner brands.

The users can choose to redeem points for free hotel nights, dining, in-room free wifi or special rates on other experiences. Better yet, they can choose to share points with friends and family.

They can also earn points through the loyalty program in other ways such as when renting cars or flying. Basically, anyway they want to use their points…they can!

Us

crazy hat giphy

Why are you wearing that hat?

This is no ordinary hat. This hat shows that I belong to an exclusive group of huge hat wearers. The HHW Club. Look it up.

Ok, bad example. But my point is that people attach elements of their personal identity to the groups in which they belong. This my friend, is called social identity theory.

Nowadays a hat can do more than give hat hair, it can say ‘the person wearing this hat advocates for sustainable fashion’ (assuming this hat does just that).

social identity theory infographic

The ‘Us’ loyalty currency plays on our in-built human desire to belong to a group and identify with shared values and beliefs (aka social identity theory).

For example, a consumer that is passionate about cruelty-free manufacturing will be loyal to brand advocates for supply chain transparency. And not only advocates but creates a community that shares that same belief.

This currency is considered “selfless” as it’s driven by the greater good of connecting members with communities beyond themselves. Coincidently your loyalty program will be a lot better off with this selfless act in play 😉

When creating your loyalty program, ask yourself: how do I help my customers show the world who they really are through our loyalty program?

Example

Flora and Fauna Recycling program image

Flora and Fauna is well known in the industry as a champion of sustainability, a value that is so clearly embedded in everything that they do.

If you are familiar with the brand you would know that in partnership with TerraCycle they have a great recycling program that encourages consumers to return a wide variety of empty product packaging – even packaging that isn’t sold at F&F!

Not only is it a sick idea, but those that take part are credited $10 to their Flora & Fauna account (A sneaky/smart plug to their actual loyalty program).

This program may not be their official loyalty program as such, however, it sure does work like one – allowing their customers to support a cause that they are passionate about (social benefit) while shopping with them (financial gain), is the ‘Us’ currency at its finest.

Flora and Fauna have developed a system that benefits the customer, the company and the planet. Honestly, is there anything better than that?

And thus was born a loyal customer. 🙌


Alright, so there they are! Your 5 currencies, but why is it important to take a holistic approach?

There’s a whole lot to love about a well-rounded loyalty program!

We’ve all heard that statistic by now: it costs 7x more to gain a new customer than to retain one.

That’s really what brand loyalty is about: customer retention.

Customer retention is a declaration of devotion that is bound to get people’s chins wagging – talking about your product and your brand. And as we know, word of mouth is pure gold as it drastically reduces your need to offer financial incentives such as coupons or discounts.

Why do we want to reduce discounts, you ask? Need I remind you of that $11 billion wasted on unnecessary product discounts?!

And yes, that is a B for BILLIONS!!!! *chokes on my morning coffee*

But, before we get hung up on all that money you will save on product discounts, let’s talk about one very important element: your team!

How Your Team Contributes to Customer Loyalty

They say: happy wife, happy life. We say: Happy employees, happy customers. Trust us, loyalty is contagious.

Take care of your employees and they will take care of your business. Its as simple as that.

Richard Branson

To truly drive loyalty, staff must be invested in the program because it benefits them, not simply the company. Not only will this assist in the promotion of your program, but also increase staff retention in the long run.

Here are some ways to help get staff invested in your loyalty program.

  1. Training- Provide employees with sufficient training and knowledge of the program.
  2. Assist with practice – Allow employees to practise loyalty program processes on company time.
  3. Internal competitions– Involve employees by awarding those that have worked to promote the program the best.
  4. Updates– Alert employees of any updates to the loyalty programs ahead of time.

How to get started?

So, now you know all the currencies and the not-so-secret ingredient (you team) for driving loyalty, let’s talk about how you get your program off the ground.

(* enters from stage right, Voice of Customer program.)

Before you even dream of a loyalty program, you need to put your finger on the pulse with Voice of Customer (Voc) program.

Having a VOC Program is crucial for validating and eliminating assumptions so that the reward program you are creating is aligned with real customer feedback and preferences.

First, find your own moments that matter, then create a program that rewards your customers how THEY want to be rewarded.

If this is top of your priority list, reach out to our team to talk about our 12 and 16-week accelerator options.


Have you missed a step? Need to perfect your VOC program first? No worries, we’ve got you boo!

Read our 2 part VOC program building blog series to get started

VOICE OF CUSTOMER (VOC) PROGRAM CHAT WITH AN EXPERT LINK

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