The Marketing Power of Rewards Programs

A rewards program can help you build customer loyalty, deepen engagement, and serve as a marketing benefit you can tout to attract new customers. Need proof? Research shows consumers in the United States account for more than 3 billion memberships in consumer loyalty programs. Here’s a closer look at how your business can leverage consumer interest in rewards, along with best practices you can adapt from major brands’ most successful loyalty programs.

Lead with a strong offer. Customers may be willing to sign up for your rewards program, but it’s important to know that their membership doesn’t equate to loyalty. In fact, just 13 percent of customers are complete loyalists who never shop around. Your rewards program should be appealing enough to entice customers to want to sign up — and use it repeatedly. Consider how your rewards program could be structured to reward customers when they agree to join, and to encourage them to return consistently. The rewards program offered by outdoor retailer REI, for example, charges members a fee to join — but then offers a coupon in the same amount of the fee to offset the cost of the program, as well as access to additional coupons throughout the year, and the ability to earn points on purchases for even more savings.


Make them feel special. Customers want to feel like they’re valued as rewards program members; 62 percent of customers don’t feel like the brands they’re loyal to do enough in return. What better way to market your rewards program than benefits that give customers the “VIP” status they seek? Whether you give rewards participants exclusive access to deeply discounted items, or host special events for rewards members that aren’t open to the public, your rewards program can simultaneously act as a reason to stay in touch with customers consistently, while demonstrating that your business is committed to giving its loyal customers the special treatment they deserve.


Partner with others. Increasingly, credit card and travel rewards programs have partnered with similar brands that embody their brand and customer ideology to structure appealing cross-sell offers for customers. The hotel chain Starwood, for example, partnered with Uber for a symbiotic relationship that rewards SPG rewards members with points when they use their Uber account. Small businesses can structure rewards program offers with partner discounts from other local businesses in much the same way. This creative approach to rewards offers can help you increase how many customers may be attracted to your rewards program, while empowering you with more insights about their consumer behavior that you can use to develop even more relevant content, promotions and offers in the future.


Surprise them. Surprising rewards customers with offers, freebies and benefits they don’t expect can be a marketing advantage that boosts customer engagement. At Sephora, for example, rewards program members receive surprise notifications when they’ve earned enough points to visit the store for a free makeover, in addition to coupons and similar special offers. 


Keep communicating the value of their rewards program membership. Rewards programs have become so popular that customers may not be aware of the points they’ve earned, or the value those points have in terms of redemption options. Provide customers with consistent updates of the points they’ve earned, how near they are to having enough points required for redemption, and ways they can earn points with your rewards program. Whether you send the information in an email, a text message update or a post card, providing customers with a running tally of points earned gives you a reason to stay in touch, and helps you stay front of mind with customers who may simply need a gentle nudge to come back and buy.


Rewards programs can be an inexpensive way for small businesses to cultivate a sense of customer loyalty, obtain invaluable customer contact information and give customers a reason to want to return. With these simple tips — many of which have proven highly effective for rewards programs executed by major brands — you can ensure that you structure a rewards program that results in the marketing return on investment you seek.

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