Online customer rewards programmes: advice for launching one and ideas

Online customer rewards programmes are a great way to attract new customers and create loyal customers motivated to make future purchases.

Research shows that existing regular customers are more likely to purchase repeatedly with higher spend, so anything you can do to encourage them to stay with your business will help to boost your bottom line. Plus, with 96% of households in the UK being connected to the internetcreating online customer loyalty programmes gives you the best chance of attracting the widest possible audience and reaping the most benefits.

To help get you started, this guide covers everything you need to know about the benefits of rewarding online customers, how to create an effective online customer rewards programme and the best types of customer rewards to include in your programme.

How do you reward online customers?

An online customer rewards programme is an effective way to incentivise new and existing customers to shop with you.

A customer retention strategy involves rewarding customer engagement, whether it’s their loyalty and continual interactions with your business with points that can be redeemed for a perk such as a discount or gift card.

As the end goal is to boost customer retention rate, online customer rewards programmes are also known as loyalty programmes.

There are many different types of online customer rewards programmes you can offer your consumers, but the most common are as follows:

• Points-based rewards programme: This is where your customers earn points each time they interact with your brand, whether it’s making a current purchase, referring a friend, leaving a product review, or more. The customer’s points accumulate on a loyalty card and can then be redeemed against a reward.
• Tiered rewards programme: As the name suggests, this type of online customer rewards programme has multiple levels offering different rewards. Customers can work their way up the tiers based on the frequency of their interactions with the business – e.g. the more you spend, the higher tier you reach.
• Paid rewards programme: With this rewards programme option, customers pay a fee to participate in a scheme that offers instant and ongoing rewards. Whether it’s a monthly fee or one-off cost, the continued value of the rewards offered to customers must outweigh the cost of joining the programme.

The benefits of online customer rewards programmes

As discussed, the overall goals when creating an online customer rewards programme include attracting more valuable customers, increasing sales and boosting customer loyalty to your brand.

Now, let’s take a look at some research that demonstrates how this approach to customer loyalty is received:

• A report by Nielsen found that 84% of consumers were likely to stick with a company offering a loyalty programme, and 70% of customers are more likely to recommend your business to someone else if you’ve got a good rewards programme
• Our own research here at Blackhawk Network has revealed that rewards-based incentive programmes outperform other programmes by 30%, with 63% of customers acknowledging that they spend more with a business after receiving a gift card reward.Plus, businesses with rewards-based promotions enjoy greater marketing effectiveness and profitability, along with superior annual performance improvements.

In short, rewards-based promotions are the best way to create a positive customer experience, generate brand loyalty, and increase the overall lifetime value of your customers.

How do I create an online rewards programme?

Having discussed the ways in which brands reward customers – and the many benefits of doing so – here is our step-by-step guide to creating an online customer rewards programme for your business.

Step 1: Make it customer-centric

Your starting point should always be your target audience. Having a thorough understanding of your customer’s needs and behaviours will help inform your rewards programme and ensure you provide customers with what they want.

Taking a deep dive into who your customers are via website analytics, surveys, and customer interviews will help you to create an enticing customer rewards programme that encourages them to remain loyal to your brand.

For example, let’s say you were to discover that the majority of your customers are millennials. You may then choose to create an online rewards programme that includes experience vouchers for spa sessions, family days out, short breaks, and more, as research shows that 72% of millennials prefer experiences over material things.

Step 2: Ensure it’s on-brand

There’s no point in having an online customer rewards programme if it’s not immediately clear that it’s part of your brand. It should be obvious from the branding alone that it belongs to your business and is aimed at your customers to build customer trust.

For that reason, the name of your programme and elements such as the colour scheme and wording should all align with everything else your brand is doing. That’s why some businesses choose to brand their loyalty points with a memorable name that connects them to their brand, such as Starbucks whose customers earn Stars, which can be redeemed for rewards.

Step 3: Tell your customers

Once your online customer rewards programme is ready to roll out, be sure to shout about it from the rooftops. Choose every opportunity available to promote it to existing and potential customers.

This could include adding a call-to-action to join the rewards programme on receipts, emails, and newsletters, as well as promoting it front and centre on your website and social channels.

Step 4: Make it easy to join

In today’s fast-moving digital landscape, time-poor customers won’t hang around if things take too long. In fact, 55% of visitors spend fewer than 15 seconds on a webpage before heading elsewhere.

So, it’s vital that your sign-up process is a seamless experience: simple and quick to complete. Only ask for the minimum amount of information needed to create the customer account. The danger with adding too many dropdowns or a long form to complete is that your customers will give up.

One way to encourage your customers to sign up is to promote the benefits of your rewards programme upfront, so they understand why it’s worth their while spending the time completing the joining process.

Step 5: Reward them for joining

As one of the biggest hurdles to creating an online customer rewards programme is persuading people to sign up, offering a reward for joining can be a great incentive.

It doesn’t have to be an immediate reward with cash value (such as a gift card) but a money-off voucher or free points to give them a headstart towards earning their first reward.

Step 6: Earning points must be easy

Another rewards programme turn-off is if it’s hard to earn points or virtually impossible to earn enough to redeem against a reward.

That’s why you should ensure that you provide customers with a variety of ways for them to earn points. As well as making a purchase, this could include signing up to your newsletter, leaving a product review, referring a friend, following you on your social channels, and much more.

Step 7: Give your customers options

If a rewards programme continually offers the same, single reward, customers may begin to lose their motivation to remain an active member of the scheme.

Offering customers a variety of rewards, such as multi-brand gift cards and experience vouchers for memorable days out, will help to keep them engaged with the programme and stay loyal to your brand as they actively make decisions to earn points to redeem against new and different rewards.

Step 8: Simple redemption

In the same way that your online customer rewards programme should be easy to join, it should also be quick and simple for customers to redeem their points for rewards.

A long-drawn-out redemption process can be frustrating and result in a poor customer experience that they are unlikely to want to repeat.

Step 9: Make it fun

Research has shown that gamification can enhance brand awareness and loyalty and online user engagement. So, it’s well worth considering adding gameplay elements, such as earning badges or moving up levels for completing certain actions or completing online challenges or quizzes to earn extra loyalty points.

What customer rewards should you include in your programme?

With the majority of people in the UK being online and UK households becoming more digital-savvy, customers are more comfortable than ever with the idea of an online customer rewards programme.

As for what sort of reward loyalty members prefer, our research has shown that:

• Offering a variety of rewards entices participation from across age and income groups
• 81% of loyalty programme members would prefer to redeem points for gift or prepaid cards
• Millennials have a preference for digital redemption, particularly with online retailers
• Using gift cards in promotions can increase annual revenue by an average of 37%

Gift cards and eGift cards are increasingly popular as they put customers in control of their rewards. They give them the freedom to choose their own reward, which can help to build customer appreciation, customer loyalty, and increase customer acquisition.

For example, our range of single and multi-retailer gift cards and eGift cards can be used with a wide selection of household name brands for dining out, entertainment and leisure, fashion and beauty, or home and garden.

As a business, you can also bulk buy gift cards from us so you have them ready to dispense immediately without having to waste time re-ordering and waiting for delivery.

eGift cards , in particular, are increasingly popular with a nation connected by smartphones. Plus, they provide brands with a near-instant way of delivering customer rewards via digital channels for a fraction of the cost of producing and mailing physical cards.

So, it should come as no surprise to hear that eGift cards were seen to outperform physical products in research by the UK gift card and voucher association.

If you’d like to find out more about creating an online customer rewards programme as part of your marketing strategy or business model and want to discuss our wide range of customer rewards and experiences, please get in touch with our team on 020 4517 5862 or complete our online form.