Choice has become such a buzz word and so very ingrained in our vocabulary: good choice, bad choice, too much choice, no choice… whatever we connect it with, choice is everywhere not just in our language but also in our lives. It is said that we make around 35,000 conscious and subconscious choices and decisions in one single day alone.*1 We take for granted having so many choices in life, but when we have no choice in a matter then we remark upon its absence in a negative way.
This is exactly how many members of loyalty programs feel today. We should not forget that each program member is also a consumer who is offered a seemingly unlimited choice in their everyday life to conveniently decide with one click what to get, do or experience. Unfortunately, the reality that this same consumer is confronted with by their loyalty program is often a very different one. In fact, many members today simply forget that they are indeed part of a specific loyalty program, because the possibility to interact with it in a beneficial way for them is just not present. As a consequence, the program and with it all the effort and maintenance you as a program manager put into it become pointless, too. But what if I promise you now, that by adding the right choice, you can completely turn this around?
So, let’s face the facts. Yes, it seems that the carefully selected and evaluated 97 retail products, you decided to offer in your reward store are just not matching the taste of your members and the available benefits your program promises is just not cutting it for most of them. Asking 1000 members of your program what they actually would like to do with their points can give you just as many answers. So how can you actually satisfy this pampered consumer who has the same expectation to achieve with your points what they would be able to get in their everyday life with cash? There are 3 concrete answers to this.
First of all, it is indeed important to offer a diversified and compelling range of trending merchandise, categories and types of products especially if you follow a reward store strategy for your program. This can be challenging in an environment where global content is key, but is absolutely possible with a strong worldwide set-up and powerful network of physically and digitally delivered rewards. However, programs need to have the ability to look beyond the product catalogue. Therefore, a diversified and compelling reward portfolio today should not only aim to provide the most amount of merchandise, but should also offer different means of redemption in every sense of this word.
One aspect is to deliver the best possible experience for your member in your reward program. Think of buying a Louis VuittonTM bag in duty free while rushing to catch your next flight, or shopping for it in the flagship store on the Champs-Elysee after strolling the streets of Paris with your family. While the price quite possibly is the same or maybe even less in duty free, the added value one associates with the service and environment of the actual purchase, is literally priceless. Make your program the ‘premium flagship’ of reward experiences for your member. They will then be happy to invest that little extra, if necessary, for a truly unique and special experience that they can rely on and always come back to.
Furthermore, statistics show that a member today is ready to accept a lower cost per point in exchange for receiving more choice and convenience (Source).*2 So go beyond the traditional redemption options and provide your consumer with a choice that they really want to make. Give them access with your points to their favourite online stores or let them load their points onto a bank card and easily convert them into cash to shop anywhere they want. Integrating your loyalty program into their everyday life and shopping experiences makes it very convenient for them to use their points and interact with your program anytime. You will see that this convenience and perceived luxury pays out heftily. Not only do you have an engaged and loyal program member, who remembers and interacts with you constantly, but you also significantly lower your redemption costs.
So how would that work? Time being a precious and limited resource for most of us, we know that today the number of program members seeking convenience versus value for points when redeeming is equally split, while the segment of the ‘convenience member’ is growing more and more.*2 When you as a program can deliver just that to them, you do not need to offer it for free. In practical terms, this means that a member is accepting a lower cost per point (CPP) in return for redeeming points easily and conveniently, if your currency is liquid enough. Smart program managers use these insights to strategically manage their redemption cost by assigning different CPPs to diverse reward categories. It is then also key to push these lower or higher cost redemption options to the right segments of your member base.
In summary, offering choice, on the one hand, increases the experience or qualitative element towards your members, as it adds value, improves the perception of your program and results in more member interaction, engagement and satisfaction. On the other hand, it has a significant quantitative impact on your program. This offered choice provides you with the strategic leverage to manage your redemption cost and the entirety of your program in a smart and beneficial way that leads to a reduction of your liability and persists long term. Are you convinced you have made the right choice for your program yet?
At Loylogic we passionately believe in choice and providing you and your members with the choices they deserve to make smart and lasting decisions that increase benefit and value on both sides. If you are interested to see how you can provide more choice and better cost management to your program, come talk to us. We are happy to advise you firstname.lastname@example.org.
*2 Survey Freddies 2016, conducted with 5355 Frequent Flyers.