How retail banks can accelerate
value in reward programs
Driving your customers towards
their Golden Moment
CONTENTS
The problem with reward
programs 2
The Golden Moment 3
No rewards program, however researched, funded and
well-intentioned, genuinely drives customer relationships unless customers
redeem their points. But with nearly $16 billion worth of rewards earned
going unused each year (source: Hlavinka & Sullivan, ‘The Billion Member
March: The 2011 Colloquy Loyalty Census’, 2011) it seems it can be
difficult to get customers into the redemption habit.
The problem with reward
programs
Nearly
$16 billion
worth of rewards earned
go unused each year
ACCELERATING FOR VALUE 3
The Golden Moment is the point when a member makes their first redemption. That’s when they change from simply collecting points to being an active, profit-generating program member. The faster your members get to their Golden Moment, the more connected they become with your rewards program, and the more likely they are to start using their bank accounts in the ways you want.
When they’ve redeemed once, they see how easy it is. Rewards become real rather than aspirational. They find other things they want to buy soon, or save for. Now they are active members, you can build a relationship between them and your bank.
Engaged members start to generate more revenue for the business.
They may spend on their credit card rather than using cash, choose your checking account over their alternative or even add their own cash to the points they earn. When your customers are satisfied with your rewards program, it enhances their view of your bank and you can demonstrate that your marketing spend is adding value.
Research shows that reward program members need to redeem their
points at least once, after a fairly short period of time (just 7 to 15 months
from joining), to become fully involved with a rewards program. Once
members start to redeem they can be 5 to 7 times more profitable to your
business than those who don’t.
The Golden Moment
Members who redeem
can be 5 to 7 times
more profitable
to your
business than those
who don’t
1
Make dreams become reality
People buy into a vision – climbing Everest, buying a sports car, going on a 5 star holiday. Offering dream rewards through your program gives a long-term goal. But, if everything seems to need years of saving, they may get disheartened.
So give a few little “love gifts” on the way. Unearned, points-free gifts – a sample of a new product, a money-off restaurant voucher – show your members the value of your program. That encourages them to start, or carry on, actively earning and saving points. Capture their dreams (with a Wish List function for instance), and you can tie in any related bonus deals or special offers.
To start your customers redeeming their points they need to want to
redeem them. They need to find things in your program that are desirable,
accessible and competitively priced.
Top tips for accelerating
performance
ACCELERATING FOR VALUE 5
2
3
Make a connection
Brands that build positive emotional connections with their customers go a long way to driving brand loyalty.
You automatically make those connections when you offer your customers a tailored selection of rewards, in a wide variety of relevant categories. And when you acknowledge they have a life outside their relationship with you, by letting them earn points with appropriate partner businesses, you strengthen that connection and increase their points-earning potential. You’ve taken the time to step into their world, dramatically increasing the likelihood of getting that customer to their Golden Moment faster.
When the positive connection is formed, your program becomes a part of everyday life, and the value then accelerates for both consumer and brand.
Make it easy
Your least frequent customers are easy to overlook when you’re designing a rewards program. But they may simply need encouragement to favor your bank over their alternative. It’s important to get them properly connected with your program by redeeming the few points they do collect.
Allowing members to add cash to their points makes that first redemption so much easier – and puts redemption in reach of every member who has any points at all. It may also push a higher-earning member to redeem points for a higher-value item they otherwise would have written off as unattainable.
Use our five program-boosters
to accelerate your members’
redemptions. When your
members redeem their points,
Roadside check
4
5
Make it for everyone
However desirable the rewards you offer are, there needs to be a trigger for that first redemption. Make sure there are attractive and relevant items that take even your lower-value members just a few months to attain.
Think about how you look after members who are “Points Shepherds”, saving for the big ticket prize, and the “Points Swingers”, who use their points on lots of lower-value items, even when they think they’re saving for that dream. The “Points Swingers” accumulate and redeem points much faster – and if they’re collecting more points, that means they’re generating more revenue for your business.
Make it known
Don’t be afraid to share good news with your program members. If you have taken the time to create a loyalty program that is tailored and relevant, your marketing communications will mirror this.
If you are sharing relevant and value adding news, offers and updates to your members, you take a content led approach to your marketing communications. You add value and solve problems and ultimately earn the attention of your customers.
For example, it’s helpful to illustrate how a point’s balance can become a holiday. It’s motivating to know how many points more they need for that trip to Everest, especially if it’s double points this month.
Use your customer data to tailor your communications so they’re personal and
relevant. And make it easy to convert interest in a new product or a special offer into an actual points redemption, with a positive and intuitive user journey.
We are part of The Collinson Group. The Collinson Group help brands across the world manage their customers more effectively. We started out over 20 years ago offering travel enhancements and insurance. We’re now a leading provider of customer management, focussed on delivering acquisition, optimisation and retention through people, products and services. The aim of every business within The Collinson Group is to support, delight and reward our customers.
All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any manner, electronic or mechanical, including photocopy, recording or any information storage and retrieval system, without prior permission in writing from the publisher. Copyright © Collinson Latitude Ltd 2014
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