Reward Program Strategy

5 Questions Marketers Should Ask About Their Rewards Program

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A rewards program is never a set-it-and-forget-it tool.  With so many of your competitors starting programs of their own, getting comfortable with the status quo could be extremely harmful to your business and overall success.  

Even some of the world’s top performing retailers are guilty of running programs that go stale over time.  Without a fundamental understanding of who your customers are and why they come back, your program can quickly become irrelevant.

Thankfully, there are ways to avoid this kind of fallout.  By asking the following 5 questions, you can avoid running a rewards program that doesn’t meet its original intentions and start building a experience that remains fresh, relevant, and rewarding.

 

1. Are Your Rewards Still Valuable to Your Customers?

The number one rule of running a rewards program is to remember that your customers are attracted to the rewards your program offers - not the program itself.  Points are simply a means to an end, and customers choose to join your program because they find your rewards valuable, engaging, and meaningful.

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Customers join your program to earn rewards, not points.

However, just because customers found your program’s rewards desirable at one point doesn’t mean this will always be the case.  People are constantly changing, and your customers are no exception. As a result, their priorities and preferences could change throughout the duration of their membership in your program, and these changes could impact the way they react to your rewards.  If they no longer feel valuable, customers will lose interest in redeeming them, causing your redemption rate to plummet.

Solution: Add New Rewards

Introducing new rewards to your program can spice up the value customers are working towards.  With more options on the table, they’re more likely to find something that matches their priorities which will push them to work harder to earn them.  These rewards could be something as simple as free shipping or free products, or allowing them to choose how many points they redeem on each order at checkout.

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Use tools like VIP tiers and Shopify Flow to make the ways customers can earn and spend rewards more exciting.

On a similar token, you can also introduce new ways for customers to earn rewards.  VIP tiers are an incredible way to boost customer engagement, and open up a whole new world of options for rewarding customers in unique and exciting ways.  Shopify Flow is another fantastic tool for customizing earning rules to your business - all with no coding required.

No matter how you choose to diversify your rewards, giving them an update can make a world of difference for how desirable your program is for new and returning customers.

 

2. Are Customers Redeeming Their Rewards?

Once of the biggest red flags that a rewards program isn’t performing well is a low redemption rate.  Since the average ecommerce redemption rate is 13%, any business that falls below that might be in trouble.  

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A healthy ecommerce redemption rate is 13% or higher.

As we alluded to earlier, customers who aren’t redeeming points aren’t interested in your program, and as a result don’t want to take advantage of the value you’re trying to offer.  Even though this means less of a financial liability for you, it ultimately means customers aren’t motivated to earn points.  This results in fewer purchases and a significant drop in customer engagement that could hurt other areas of your business.

Solution: Assess Redemption Thresholds

One of the easiest ways to increase your redemption rate is to make rewards easier to redeem.  The trick is to find the balance between making rewards challenging but attainable. If a customer needs to make 30 purchases before redeeming a reward, or spend $300 when your products are priced in the $10-$20 range, it can be extremely frustrating to participate.  

Consider using welcome points, birthday rewards, or social sharing rewards to push customers closer to their next reward.  These are easy ways to get customers engaged in different parts of your brands while helping them rack up some more points.

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Need more help with setting redemption thresholds?
Our points program strategy guide gives you everything you need to design a program that motivates customers to earn and spend their loyalty points.

MUN Skin's customer panel with progress bar

Progress bars are another great tool for motivating points redemption.  MUN’s customer rewards panel clearly shows members how close they are to their next reward within seconds of logging into their account.  This visual cue lets them know how close they are and works to re-engage them with the program, pushing each customer to make just one more purchase in order to earn their next awesome reward.

 

3. Has the Buzz Around Your Rewards Program Gone Stale?

When you launch a new rewards program, it’s easy to get your customers excited.  They already love your brand, and are happy to be given the chance to get more value from it.  

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Your rewards program should be an extension of the brand your customers already know and love.

Unfortunately, the novelty wears off after a while - especially if you haven’t done anything to improve your program in a while.  Since many reward programs share similar functionality, it’s easy for yours to start looking a bit like everyone else’s. Without something exciting like a staged launch or rollout to grab new and returning customers’ attention, your program engagement rates will once again start to go down as customers become disinterested in the program you’re showing them.

Solution: Improve Your Program's Branding

Your rewards program is an extension of your existing brand, which means it should look and feel like it.  There are a number of different ways you can improve that seamless experience, including customized email messaging or building a program-specific explainer page to get customers involved in your program.

Spectrum explainer page with brand colors

You can also start simpler and focus on getting your onsite experience to integrate with the rest of your site.  Take Spectrum Collections, for example.  They’ve spent a lot of time designing a customer panel that uses branded photography, colors, and copy to seamlessly integrate with the rest of their website.  

Spectrum rewards panel with brand colors and images

From the products they sell to the colors they use on each product page, Spectrum’s rewards program melts beautifully into their entire brand experience.  These considerations make it an enjoyable a logical addition to every interaction with their store, prompting customers to seek it out every time they engage with the cosmetics brand.

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Need more help with branding your rewards program?
Our quick 5-step branding guide has all of the tips, tricks, and strategy you need to take your rewards program up a notch.

 

4. Are You Relying on the Right Data to Measure Success and Make Decisions?

There’s a ton of different metrics you can track in an attempt to stay informed about your program, but they’re only as useful as you make them.  Simply collecting data isn’t going to help you understand how your program’s performing or how customers are engaging with it - instead, it’s more likely to overwhelm you.

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Data that isn't actionable won't help you improve your rewards program.

Data for data’s sake is never an effective way to improve a rewards program.  Similarly, calculating metrics without taking the time to understand and act on them is not the key to program improvement.  You need to find a balance.

Solution: Take the Time to Understand Your Data

Although this solution might seem obvious, it’s something too few brands are actually taking the time to do.  Improving your program’s branding, adding new rewards, and monitoring your redemption rate mean nothing if you don’t take the time to ask the right questions.  Sometimes it’s as simple as slowing down and asking why you’re tracking and measuring certain things.

An easy way to work this into your program maintenance is to work with a provider who’s passionate about actionable analytics - not just data for the sake of data.  With action-focused analytics, you’re given the tools you need to focus on the part of your program that actually dictate how healthy it is.

Smile Analytics dashboard

From total value generated to the marketing spend you’ve saved with referrals, the data you get from a Smile program (yes, we’re tooting our own horn) will actually help you improve and iterate on your rewards program to help you start seeing better results and increased engagement with every change you make.

 

5. Are You Getting the Right Kind of Customer Feedback?

Feedback can be extremely hard to get.  Even though they have lots of opinions, customers aren’t always willing to take the time to share it with you.  Either it’s too inconvenient or it seems like a lot of work, making the payoff of being heard dim in comparison.

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Getting customers to share their feedback can be the key to significantly improving your customer experience.

This type of thinking can make it difficult to incorporate their needs and desires into your program, widening the gap between what they’re looking for and what you’re delivering.  Without feedback, you can’t improve your program and customers might remain unhappy. This makes it critical for you to find ways to get their feedback without asking them to jump through hoops or give up a lot of their time.

Solution: Include Your Program in Social Media Marketing

There are a number of reasons social media is a fantastic tool for your rewards program, but one of the biggest is accessibility.  Customers are already spending so much of their time on social media that it easily becomes an extension of their mobile experience with your brand.  With ample experience engaging with it on a regular basis, customers won’t need to be taught how to interact with you - they’ll just do it!

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Brands like Pele Soccer have quickly adapted this method of communication.  With posts on Twitter, Instagram, and Facebook, they open the door for starting real conversation with customers about what they expect and look for in a rewards program.  This not only helps customers feel like their voice is being heard, but also increases brand impressions and visibility at the same time.

With the added incentive of points for sharing or following your store, customers begin to incorporate your program into their daily sharing habits, making it an integral part of their routines and lifestyles.  

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Get all the answers to your questions about boosting program engagement.
Find out how easy it can be to improve your rewards program with our industry-leading strategies.

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