Many CMOs face the problem of trying to entice customers by providing discounts, and want to use a large enough funding rate to make a significant impact on their customers’ spending, but they also do not want to lose their margins.
Offering discounts is an important aspect of marketing and helps with customer acquisition, but often delivers diminishing returns and does not sustain customer engagement in the long term. What’s more is you’re losing money over providing discounts to customers who are making purchases that they would have made anyway. You’re left with losing money over not consistently changing customer behavior.
You do not need to rely solely on discounts and high funding rates to motivate customer spending. You can keep your margins and increase customer retention through a different approach, and this approach is engagement-based rewards.
Why non-monetary rewards work
Customers want special offers. The trick is that certain customers value certain benefits as much as monetary discounts, if not more. These benefits have high perceived value. For example, an engagement-based reward may only cost you $5, but have a perceived value of $20 to the customer. The point is to offer engagement-based rewards specific to what the customer values highly. They may want exclusive knowledge about exciting things going on within your company, an exclusive item, or access to a special event with recognition for being a loyal customer. Another example is to offer exclusive access to new merchandise, after the customer purchases a certain amount. Not only are you motivating customers to spend more, but they are rewarded with an experience that brings in more profit. Many options, such as providing exclusive early access, are virtually free. This means that you are fulfilling their wants, in a way that does not eat away at your margins.
Remember to focus on relevance
Make sure to collect data on what your customers are interested in to provide the most relevant rewards. Collecting information from private site exchanges, as well as information that they provide through surveys, feedback, and connected social accounts can be very useful. You want to know what they enjoy within and outside of your company and their interactions with your company at all touchpoints. Reward relevance is important to the customer, and 64% of people would actually choose to have their individual activity tracked if it means they will be presented with relevant offers. Relevant rewards have a higher redemption rate and the customers feel like you are listening to what they want.
Offering a variety of strategic rewards is a win-win situation for both you and your customer. You can lower your funding rates and simultaneously build upon your relationship with satisfied customers to increase their customer lifetime value.
To learn more about loyalty strategies and rewards, and how 500friends can help your company, contact firstname.lastname@example.org.