Giri Agarwal
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Mon, October 09, '2023

Moving Beyond Points: The Future of Retail Loyalty Programs

We recently published a Playbook that dives deep into Unified Rewards & Loyalty. One of the key components of the Playbook is "Next-Gen Rewards." This is where the future of customer loyalty is headed, and it's not just about points or discounts.

Moving Beyond Points: The Future of Retail Loyalty Programs

Why Points Don't Cut It Anymore

Rewards programs used to be simple: spend money, get points, and redeem those points for discounts or products. It worked for a while, but customers today want more. They seek an emotional connection and value-added experiences. If all you offer is a basic points system, you might find your customers looking elsewhere for a more engaging experience.

What Are Next-Gen Rewards?

So what do we mean by Next-Gen Rewards? It's about shifting the focus from transactional benefits to experiential ones. According to Open Loyalty, 43% of industry insiders believe that experience-based rewards will dominate loyalty marketing in the next 2-3 years. Our own research reveals that 63% of shoppers prefer these kinds of rewards.

Experience-Based Rewards

Rewards are no longer about transactional gains; they're about experiences. Consider Early Access Rewards, where customers get first dibs on new collections or limited-edition items. Or how about Exclusive In-Store Events, like a private fashion show or a cooking class led by a renowned chef? These reward types build brand affinity by delivering experiences that are meaningful to your customer.

Sephora's Beauty Insider program often allows members to get early access to new product releases. They also host beauty classes where members can learn new makeup techniques and get professional advice, adding an experiential layer to their loyalty program.

Community and Lifestyle Benefits

Building a sense of community is crucial for modern brands. Community Engagement Rewards can be as simple as hosting a book club or monthly meet-ups focused on brand-relevant topics. Then there's Lifestyle Experience Rewards, such as offering free yoga classes or weekend adventure trips when a customer crosses a certain spending limit.

REI's Co-op membership offers exclusive access to outdoor classes and events, fostering a sense of community among customers who share a love for outdoor activities. From beginner classes on how to pitch a tent to more advanced hiking expeditions, these experiences create a lifestyle connection with the brand.

Exclusivity and Personalization

Exclusive services make customers feel valued. Think about Member-Specific Pricing, where you reward frequent buyers with custom discounts. Curated Subscription Boxes are another way to add a personal touch. Here, you’re sending a box of specially selected items to members at regular intervals. You could personalize the contents to be anything from the latest fashion trends to a variety of gourmet cheeses.

Through its NikePlus membership, customers get access to exclusive products and early releases. The app even offers workout tips and connects to the customer's Spotify account to suggest playlists for workouts, making the entire experience tailored to individual needs and preferences.

Coalition and Partnership Rewards

Partnering with other brands can expand your rewards ecosystem and offer benefits beyond your store’s walls. Under this umbrella, you'll find Partnership Rewards, like earning points at your clothing store that can be redeemed for a free coffee at a local cafe. Then there's Social Responsibility Rewards, where customers can choose to direct their earned points toward a charitable donation.

Walgreens partnered with DoorDash to offer on-demand delivery. Loyalty members can earn Walgreens Cash rewards for purchases made via DoorDash, creating a win-win situation for both companies and adding value for their shared customers.

Digital-First Perks

In the age of digitalization, customers are looking for more interactive and tech-savvy rewards. Tech-Enabled Personal Shopping allows customers to get suggestions based on their shopping history. Virtual Travel Experiences can also be a part of this, offering top-tier members a virtual vacation experience.

Amazon Prime remains perhaps the best example of offering a rich flywheel of digital benefits such as streaming services, downloadable books and podcasts, and early access to deals. These tech-enabled benefits go beyond traditional retail rewards, and are a large part of Amazon’s strategy to create near irreplaceable stickiness.

What This Means for Retailers

By diversifying your rewards, you not only make your loyalty program more attractive but also create multiple touchpoints for customer engagement. This approach brings in a greater sense of purpose and community around your brand, encouraging customers to not just shop but also engage on a deeper level.

It’s clear that next-gen rewards are more than just an upgrade; they're a paradigm shift. This isn't just about keeping up with industry trends—it's about setting new ones. If you're keen on moving past the old and embracing what's next, the time to rethink your rewards program is now.


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