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We’ve come a long way from the negative and misleading perception that rewards programs are only for low-income consumers. I know millionaire investors who make sure to use their air miles and take advantage of the punch cards and points systems at local mom-and-pop cafes. The traditional approach of building a brand and a loyal customer base is being replaced by rewards programs, which disproportionately benefit larger publishers. The more these consumers spend, the more they get back – setting up a virtuous cycle for both buyer and seller.
In our survey of more than 50,000 consumers, only 3% said they would stay true to their top brand if a competitor offered cashback or points incentives. The explosion of the number of products against marginal price differentials on retail platforms helps explain this dramatic shift. With so many transactions taking place online, consumers are influenced by the best deals, the best reviews and the best rewards.
Rewards build over time, so the goal of these programs is to build an ongoing relationship with customers, especially those who spend the most. It’s a simple equation: offering them the most value keeps them the most loyal. Brand value may not be deadbut it is being redefined by the need to reward repeat customers in this more complex work environment.
Related: How Brands Can Turn Short-Term Rewards Into Long-Term Loyalty
Rewards programs are everywhere
From your local juice store offering a free drink after collecting 10 stamps to the big players like Amazon Prime and Target circle, rewards programs are ubiquitous and public awareness is high. Nearly 80% of people in our survey said they were familiar with apps and websites that offered purchase rewards. Software company Oracle reports this. 72% of consumers belong to at least one loyalty program.
While reviews undeniably have a significant impact on consumer choices, it’s clear that spending habits are increasingly centered around the strategic redemption of reward points. For example, when Discover Card designates certain merchants that offer additional points for a limited period of time, consumers are encouraged to spend more at those locations. Such strategic initiatives offer bonus points to consumers and boost the entire ecosystem, creating a win-win scenario for all parties involved.
Brand loyalty is also determined by consumers’ preferred rewards, with two studies split across the No. 1 category: Capgemini says 69% of consumers prefer cashback over all other rewards, while brand found that 79% of respondents preferred discounts. The constant is that everyone wants to be recognized and appreciated for their loyalty.
What works best for you?
There are two types of loyalty programs: your own hosted program and an externally hosted program that provides a rewards ecosystem. Whichever you choose, you don’t have to have a business.
A hosted program can vary from company to company, but it is probably the type you are most familiar with. You spend enough money or make enough purchases from a company and get rewarded with a free item or something similar from the same company. Nearly every small business now has punch cards or a points system that rewards us for coming back regularly – whether it’s your local coffee shop or the restaurant down the street.
On the other hand, I see growth in external loyalty programs that allow brands to reach new customers And reward them for sticking around. These programs can be divided into two more categories: One that works with individual industries or market segments, such as Ibotta’s. reward program which offers discounts in groceries and retail, and the other which operates across the consumer landscape.
I call the second type of program a ‘unified provider’. These types of rewards programs are evolving in unique ways as mobile apps allow people to be rewarded based on where and when they spend across different stores and brands and collect rewards.
Related: 3 types of rewards programs every retail brand should know about
Go beyond games
The increase in mobile usage over the past decade has unlocked tremendous potential for these unified rewards platforms. My business wants to become the primary channel for consumers to collect rewards from a variety of spending options. Initially focused on mobile gaming, we plan to expand into other industries such as fuel, groceries and other areas where consumers want to be rewarded.
One of the main advantages of a unified provider lies in its cumulative nature. This allows consumers to accumulate more points than they ever could through multiple independent programs. The more consumers spend across categories, the more rewards they get, creating more value for the unified provider. The provider, in turn, can afford to share more rewards with the customer, keeping them engaged with different suppliers. Essentially, this creates a virtuous circle in which all parties involved emerge as winners.
Do your homework
The arena of rewards gaming and mobile rewards programs is relatively unknown. It’s understandable that people are skeptical about earning gift cards simply by playing a game – it seems too good to be true! This newness and a dynamic market clearly indicate that brands need to do their homework thoroughly before venturing into these emerging reward ecosystems.
If you want your company to use an externally hosted rewards program, be aware that the market can be volatile. New providers often emerge, but disappear just as quickly if they fail to strike a balance that benefits all stakeholders. Reliable sources are crucial for gathering insights and making informed decisions. Major contributors to the app install ecosystem regularly publish performance indexes from leading publishers. These indices often include information about rewarded engagement players, making them valuable starting points for verifying potential partners.
Related: Dunkin’ Donuts customers express their anger online at the higher-priced rewards program
The story of consumerism has turned; it is no longer just about brand loyalty. The landscape of innovative rewards programs, from local businesses to global companies, is expanding, evolving and firmly establishing its presence. And it’s not just about choice or variety.
Generate repeat customers around 65% of a company’s turnover, underscoring the vital role of rewards programs in customer retention, sustainable business growth and market differentiation. They have become much more than just a trend; rewards programs are an essential strategic tool in today’s consumer market. Brands that recognize this shift and harness the power of rewards will thrive in this dynamic environment, improving their relationships with consumers and ultimately their bottom line.