We all know and love the feeling of that “Free Coffee” loyalty reward in the morning, but we tend not to think too much about it. The diminishing returns of rewarding a consumer’s good spending behaviour at your business comes in the form of complacency – we eventually come to expect the reward, and when it is removed – the consumer takes action.
This is what happened when Woolworths changed their loyalty program – and it led to disgruntled consumers. Many felt that their right to be rewarded was being compromised. They felt as though it was hard enough to earn rewards already with things like Fly Buys or Qantas Points – now it was nigh-impossible.
But the problem here isn’t that they changed the program – it’s that they inherently undervalued the consumer-brand relationship that a Rewards Program is meant to build. Consumers know very well that it isn’t their loyalty that is being rewarded here; it’s their data. It is a common misconception that brands use loyalty programs as a way to reward customers – they use it to collect data, which is ultimately, far more valuable.
It is this customer relationship that must be cultivated. Rewarding consumers for giving up a bit of their data in exchange for that $25 gift card. The handshake here is subtle but effective – and we should keep that in mind when creating a valuable rewards program. We’ve seen businesses put too much emphasis on the “bottom line” of their loyalty system – for example, a coffee shop lowering the number of points needed to get a free coffee because his competitor across the road is doing it – and it leads to an arms race that does not benefit either party. The relationship is broken: you’re now rewarding a customer for their loyalty instead of on their data.
Don’t be afraid to put up some more costly rewards in exchange for more data: the consumer understands this relationship. In the end, it’s going to be about the business which utilises this data exchange to their advantage and meets the consumer half-way.
If you’re interested in changing up your Rewardle rewards program, get in touch with our Success Team on 03 8593 4173 or firstname.lastname@example.org – we’d be happy to discuss some with you!