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Are You Really Taking Stock of Your Loyalty Rewards?

 


By: Hilton Barbour

Maybe it was all the excitement and hoopla around Elon and Twitter last week, but when this tweet came across our newsfeed, it did cause a momentary pause and a few hours of internal backwards and forwards around the merits of this type of loyalty reward.


This isn’t a particularly new idea and folks like Bumped are probably the most active leaders in this space. But there is certainly a very logical case to be made for giving your most loyal and active consumers a genuine stake in the very company that they seem so enamored with. After all, as any super engaged loyalty member will tell you, there is only so many points they can accumulate, so many free flights they can take and so many room or rental car upgrades they can use each year.

As we’ve opined often in this newsletter, one thing about playing in this game, your loyalty program rewards have to be genuinely, errr, rewarding.

Outside of Benjamin Franklin’s classic line about death and taxes, we can tell you two other universal truths about loyalty programs that doom them to low participation and limited engagement from those who sign up.

1.            To earn any significant reward requires a highly complicated, onerous set of behaviors or actions from the consumer.

2.            The pay out or attractiveness of the rewards on offer are boring, uninspiring, and are barely worth the effort of repeat visits and frequent transactions with the program provider.

That’s why the idea of rewarding loyal customers access to fractional shares piqued our interest and unleashed a volley of internal debate. Granted they’re likely not a panacea for every consumer who signs up to join your program – after all some might be perfectly happy with a free coffee after ten visits – but it does bring an air of novelty (never a bad thing), intrigue (again a great way to avoid consumer boredom) and a feeling of genuine ownership to your program.

Importantly for you as the loyalty program owner, it reduces the incentive to “cash out” or “zero out” their points and rewards balance once they get to a certain threshold.

If your stock is performing well – and participating with your business will invariably improve that performance – there’s a definite attraction to earning stock through your loyalty program…and holding on to it.

At Kognitiv we are particularly sensitive to those two universal truths about loyalty programs. That’s why our collaborative commerce approach facilitates brands and businesses being able to quickly and painlessly collaborate with non-competitive brands to create unique and novel rewards and offers.

While traditional partnerships and coalition models also bring businesses together, in the majority of cases, those partnerships often become unwieldy, difficult to manage and anything but nimble. Collaborative commerce enables you to partner with businesses who share similar business objectives but quickly turn up – or turn off – those that aren’t performing.

There is a reason that many loyalty programs suffer from high percentages of inactive or infrequent participation. Sadly, many of those reasons are entirely preventable with the right program construction and by paying keen attention to the portfolio of rewards you’re offering your members.

Fractional ownership as a reward might not make sense for your company and for your members but taking frequent stock of your loyalty reward portfolio is something we’re definitely bullish about. 

Hilton.barbour@kognitiv.com

Ray.chelstowski@kognitiv.com

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