Customer Rewards: a step-by-step guide to launching your rewards programme

Did you know that 85% of business growth is from loyal customers?

77% of customers say that loyalty rewards programmes make them more likely to continue doing business with a brand and 63% adjust their spending habits to maximise the customer rewardson offer.

This is particularly important as existing customers spend over 30% more than new customers and are 50% more likely to try new products.

If you’re considering introducing a rewards programme, this guide uncovers everything you need to know. From what customer rewards are, to why customer loyalty is important to a brand. Read on to discover a customer rewards checklist of things to consider before launching your programme.

What is a customer reward?

Customer rewards are incentives given to customers in exchange for their loyalty to your brand.

They are an easy and effective way to encourage engagement, loyalty and retention, as well as increase customer lifetime value.

The giving of rewards – such as gift cards and digital rewards – drive shoppers to engage with your business. In fact, research has shown that 68% of regular customers will join a loyalty programme offering rewards, and that loyalty programme offering rewards, and that rewards-based promotions can increase average profit margins by 62%.

How do you offer rewards to customers?

The most common way of giving shoppers access to customer rewards is via a loyalty programme, which is essentially a rewards-based promotion introduced by a company to encourage repeat business.

Ideally, loyalty programmes – also referred to as customer loyalty schemes or incentive programmes – should focus on both your business goals and your customers’ needs. The ultimate aim with your actions is to develop a stronger relationship between your brand and your buyer.

The most popular ways of offering rewards to customers are:

• Giving points for making purchases that can be exchanged for rewards
• Incentivising purchases by offering instant rewards such as gift cards and digital rewards
• Encouraging loyalty with purpose-driven donations to charities on their behalf
• Offering a tiered approach so customers can earn more valuable rewards for certain behaviours
• Introducing a rebate loyalty programme where the more customers spend, the more benefits they receive

Research has shown that the best rewards are those that appeal to a wide variety of people. These types of rewards help to incentivise ‘second best’ customers into the desirable category of ‘most loyal’.

Why is it important to reward customer loyalty?

In a competitive marketplace, customer rewards show customers they are valued, which can incentivise them to remain loyal in favour of choosing a competitor brand based on price.

In fact, customer loyalty programme members are 75% more likely to make a repeat purchase after receiving a reward. Not only that, repeat purchases from existing customers are more likely to be of a higher spend.

As well as keeping existing customers loyal, rewards can be an effective way of winning back lapsed shoppers who have stopped making purchases or as a way of offering instant compensation following an unsatisfactory experience.

Customer rewards are also a cost-efficient way of retaining customers. According to research, it costs a business nearly five times more to attract a new customer than it costs to generate repeat business from an existing one.

As author and ‘King of Sales’ Jeffrey Gitomer once said, “Customer satisfaction is worthless. Customer loyalty is priceless“.

How to create a customer reward system

Customer rewards are big business. On average, loyal customers make up 20% of a business’s entire customer base, but that 20% drives a massive 80% of a business’ revenue.

One study found that 60% of shoppers are willing to make purchases from a brand with slightly higher prices in order to earn a reward from a loyalty programme.

To help you offer the most value and get the most return from a customer rewards programme, here are some things to consider before jumping in and launching one.

1. What do your customers want?

21% of customers will give up on a loyalty programme if it doesn’t offer relevant rewards. This highlights the importance of truly knowing who your target audience are and what they want.

Everyone likes a freebie, but with numerous customer reward loyalty schemes out there in the marketplace, customers can afford to pick and choose the ones that align with their needs and values.

That’s why taking the time to undertake research and study customer analytics before embarking on a rewards programme can pay dividends. It will empower you to create rewards that speak to your customer’s interests, which will help to increase engagement, develop trust in your business, and ultimately strengthen their loyalty to your brand.

When you want to give your customers choice-based rewards, gift cards, pre-paid cards, and digital rewards are fantastic options as they give flexibility to control the reward experience, which ultimately makes it more rewarding for them.

2. What are your business goals?

Your overall purpose for introducing a customer rewards programme may be to boost loyalty and increase lifetime value, but what other business goals do you want to achieve?

A carefully designed loyalty programme can help a business accomplish numerous goals by rewarding customers for particular non-purchasing actions and behaviours that are important to your brand.

This could include leaving a product review, engaging with your social media channels, creating user-generated content, referring a friend, subscribing to your newsletter, or making purchases on particular days. The key is to ensure that your loyalty programme rewards your business as well as your customers.

3. Make it easy for customers

69% of millennials think that loyalty schemes are too hard to join or to earn rewards. And, 75% of customers will switch brands for a better loyalty programme. So it’s vital you do everything possible to ensure that your rewards programme is easy to use and simple to redeem.

With so much choice on offer, loyalty programmes that are difficult to join or complicated to follow are simply giving customers an excuse to give up and join an alternative rewards scheme.

This includes the ways in which customers can engage with the programme – 95% of shoppers said they are keen to engage with loyalty programmes through new and emerging technology such as AR and VR. Our own research found that although millennials and Gen Z are most open to digital rewards, 76% of boomers are interested in shopping online for at-home delivery.

4. Provide instant gratification

It is extremely important that rewards given to customers are instant. Having a long wait for a ‘thank you’ is the biggest frustration for shoppers. Research shows 63% of customers expect to receive their reward within one to three days.

As for Gen Z shoppers () research has shown that for shoppers. Research shows they are attracted to loyalty programmes that offer instant gratification. So don’t risk ostracising customers with a long-drawn-out rewards payout process.

5. Offer a choice of customers rewards

80% of customers are excited to discover new ways to earn loyalty points so think of different ways to add value to your rewards.

This could be discounts, free shipping, gift cards, or digital rewards, or something else entirely. 80% of shoppers prefer customer rewards programmes that offer surprise gifts and rewards such as cinema trips, tickets to events, or free magazine subscriptions.

The key is to offer customers variety. For example, we offer One4all gift cards, fwhich is a multi-retailer gift card. It gives customers the freedom to choose items both in-store and online from over 140 brands such as Argos, M&S, and Currys PC World rather than having to select a reward chosen by the owners of the loyalty programme.

6. Let your customers know

Once your customer rewards programme is ready to launch, be sure to promote it everywhere and anywhere. Beyond a marketing campaign to officially launch the programme, constantly remind customers on your social media channels, email communications, app push notifications, and in your newsletter.

Don’t forget that different audience types use different communication channels so be sure to tailor your customer rewards messaging to their particular preferences.

Promoting your rewards programme shouldn’t simply be a last gasp attempt to retain customers but an ongoing part of your marketing strategy. Periodical reminders promoting the scheme and new rewards will help keep customers engaged and encourage repeat business.

It’s important to note that customer rewards programmes aren’t just a marketing initiative. To get the best return on your investment, everyone in the company from sales and customer relationship support to upper management should be aware of and invested in its success.

As well as promoting the loyalty programme itself, highlight the benefits of joining to your shoppers. After all, that is what is going to persuade them to join – and encourage them to remain loyal to your brand.

7. Choose a trusted customer rewards partner

When it comes to customer rewards, it can pay dividends to work with a partner who understands reward programmes and has the experience and knowledge to make sure it succeeds.

Without blowing our own trumpet too much, we’re the global leader in rewards. With over 37,000 corporate and government partners in 28 countries, over $4 billion rewards fulfilled annually, and 775 million cards issued each year, we’re perfectly placed to launch your customer rewards programme worldwide.

Our partners include over 200 ever-popular brands such as Disney, eBay, Tesco, iTunes, and Facebook and we offer a huge range of customer rewards including digital rewards, gift cards, pre-paid cards, and exclusive gift cards that are only available through us.

We can even customise many of our customer reward options with your brand and logo, and deliver them in bulk to a central contact or directly to individual recipients.

Want to discover more about how Blackhawk Network can make a difference to your business? Get in touch today on 020 4517 5862.