Creating Rewards Programs That Work

Program differentiation is key to ensure your loyalty members are active users.

June 22, 2015

NEW YORK – Every week, a new brand is launching, or updating, its rewards program, leading to a real risk of loyalty fatigue from consumers. According to Bond Brand Loyalty data analyzed by eMarketer, U.S. consumers belong to more than 13 loyalty programs, on average. But only half of users are active members.

According to a recent article in Ad Age, new offers that combine loyalty programs may stem some of the lack of engagement from non-active rewards members. Apple is now rolling rewards into Apple Pay and American Express recently launched its new loyalty coalition, Plenti.

But, writes Ad Age, brands need to step up to the plate as well. As an example, they cite several retailers that they say embody best practices for rewards programs.

Walgreens walks the walk, rewarding shoppers for activities that connect with their brand positioning. For instance, their program offers loyalty members additional points for making healthy choices (both inside and outside the store) and the rewards app connects to fitness devices and apps for easy monitoring. As of August 2014, the program had 82 million active members, according to an annual report.

Some retailers are also rewarding consumers with more than just deals and discounts. GameStop's PowerUp Rewards program, which has 40 million members, has a paid version that costs $14.99 a year and offers customers exclusive access to merchandise, special deals and discounts, bonus points, and a magazine, making the customer feel like they are part of an exclusive club.

Today’s consumers are often skeptical of providing the personal data requested by loyalty programs, so retailers who show the customer value for their data are uniquely positioned for success. For instance, Sephora gives customers access to their purchase data so they can remember what they’ve bought in the past, and its loyalty program offers custom deals and free beauty classes, as well as tiers of membership that unlock private shopping events, new products and sales, and free shipping when customers spend more.

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