Value Menus and the Importance of Multiple Ways to Redeem Rewards

May 25, 2016
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Have you ever tried to plan a dinner for a huge group of people?  If you have, you’ve probably come to the conclusion that you can’t please everybody with one meal.  Between dietary restrictions and preferences, it’s next to impossible to cater to everyone’s needs specifically.  But that doesn’t mean that you shouldn’t try.

Designing a loyalty program can be a similar experience.  As a merchant, you want each of your customers to have the best experience possible.  This means that you’re trying to consider the needs of Baby Boomers, Baby Busters, Millennials, and everyone else in between when designing your rewards.  At times it can seem impossible as each group has their own needs and values.

multiple ways to redeem rewards competing

Don’t lose heart, though!  What if I told you that you can please every single one of your customers without designing multiple loyalty programs?  What if I told you it all starts with a burger?

I know what you’re thinking – hamburgers have nothing to do with ecommerce.  Normally I would agree with you, however a fast food restaurant’s Value Menu is actually a great model to use while examining this issue.

multiple ways to redeem rewards menu

When you break it down, you can see that fast food offers its customers a variety of choices at comparable prices that are all both appealing and satisfying.  Your loyalty program should do the same thing.  How do you do that?  By offering multiple ways to redeem rewards points.

 

Fixed Discount (aka “The Original”)

Like a classic burger is to a fast food joint, fixed discounts are an excellent foundation for any loyalty program.  With this type of reward, customers are able to trade in a certain number of points for either dollars off or a percentage off of their total purchase.

multiple ways to redeem rewards original

This type of reward is what many people would think of when they hear “rewards program”, making it a tried and tested model for points redemption.  Countless programs use this model successfully because it’s immediately gratifying and easy to understand.

Fixed discounts also give you as the merchant a great opportunity to increase your sales.  When customers are given the option to receive a percentage or dollar amount off, they will be more inclined to continue shopping to further increase their savings.  It’s a great trade-off – your customers are happy to spend less on each of the products they want, and you see an increase in revenue and average order value.

 

Free Shipping (aka “The Original with Cheese”)

The fight for free shipping is a constant battle within ecommerce, creating a colossal pain point for customers.  Depending on where they’re located, customers could easily double the total cost of their order simply because of the added shipping costs.  This creates an extremely negative impression of the brand, and limits the likelihood of repeat purchases.

multiple ways to redeem rewards with chesse

Giving your customers the option to redeem rewards for free shipping is similar to adding cheese to a hamburger.  While the basic reward remains the same, it’s been specialized to satisfy a particular desire within the consumer.

Free shipping is also a great reward to add because many customers have come to expect it.  With this in mind, a free shipping reward will provide your store with an increase in positive reviews and an excellent customer experience.

multiple ways to redeem rewards instant gratification

The cherry on top is the fact that free shipping reintroduces immediate gratification to the ecommerce experience.  While shopping online saves the customer from having to go to the store and physically pick it up, they still have to wait for the product to be delivered which can take quite a long time and negatively impact their customer satisfaction.

By offering additional benefits at the time of checkout your customer’s satisfaction will go up, keeping you top of mind as a merchant who offers great value.

 

Store Credit (aka “The Deluxe”)

Whenever I received a gift card as a kid, I was beyond excited because the possibilities were endless.  Not only could I choose to buy whatever I wanted, I could also decide when I wanted to spend it.  It’s the same with a deluxe burger – you get to choose whatever toppings you want and reap the benefits of choice and customization.

multiple ways to redeem rewards the deluxe

Offering store credit as a reward in your store will instill the same sense of freedom in your customers as they’re given the opportunity to potentially treat themselves to something they wouldn’t normally purchase due to price.

Store credit is definitely an imperative if you’re selling luxury or premium products.  Often vendor’s agreements make it impossible for you to offer these products at lower costs, but store credit allows you to provide great value to your customer and uphold your agreement all at the same time.

multiple ways to redeem rewards credit

Store credit also fits extremely well into programs designed with customer groups or tiers.  Nobody said that all rewards need to be available to all of your customers!  Making store credit available to only your best customers will create a sense of luxury and elitism that will prompt other customers to spend more in order to reach that level.  You only need to look at Sephora’s VIB Rouge program to see that elitism sells.

 

Exclusive Products & Partner Rewards (aka “The Banquet Burger”)

Banquet burgers are my absolute favourite thing to order at a restaurant because it gives me the classic burger toppings I love and cheese and bacon.  In other words, it’s taking the original burger to a whole other level.  You can do the same with your loyalty program by incorporating exclusive products and partner rewards.

multiple ways to redeem rewards the banquet

There are two different approaches you can take with partner rewards:

  1. Customers can earn points while shopping at a partner store
  2. Customers can redeem points for purchases at partner stores

By giving your customers the opportunity to benefit from their purchases with other retailers, you go above and beyond their expectations.  Not only are they able to earn points to redeem with your brand (which they already love), but they are also given an incentive to try new products related to your own.  Working with partners whose products compliment your own will result in an easy integration into your program and will add nothing but value for your customers.

multiple ways to redeem rewards expectations

Partner rewards and exclusive products can also be looked at similarly to store credit, specifically in regards to tiered programs.  Just like store credit, allowing your most loyal customers to redeem their points for exclusive products from your store makes them feel appreciated and special.  

multiple ways to redeem rewards influencer

Similarly, this is a great avenue for revealing new products to customers and developing your customer influencer database.  Allowing your most loyal advocates to purchase products first will give them the opportunity to promote them via social media and word of mouth.  In these ways, your products will be put in good hands and will help heighten your program’s sense of luxury.

 

The Skinny on Satisfying Rewards

At the end of the day, you need to understand your customers.  Designing a loyalty program is an art which requires you to offer rewards that suits your customers’ purchasing needs and patterns.  That means that some of the previously mentioned rewards might not be appropriate for your store or brand, but knowing what’s on the menu will help you develop a value menu that satisfies all of your customers’ cravings.