Loyalty rewards are one of the most crucial components of customer loyalty programs. In order to meet customer expectations and drive high levels of engagement, loyalty rewards should have the following characteristics:
Flexibility: good loyalty rewards must be flexible enough to cope with both changes loyalty program scale and customer preferences. Rewards should both stimulate initial customer participation and influence the way customers are attracted to the program over time.
Attractiveness: no matter how sophisticated and good looking a loyalty program is, customer won’t join it if the rewards are not attractive enough.
Fun: rewards which are considered “fun” by customers are not only more attracting, but also more memorable and engaging. Gamification can help a lot here.
Must be attainable: if customers perceive the rewards as unattainable, they will most likely lose interest. For example, if it takes too long for customer to accumulate points, or if the program rules keep changing, there is a high probability that they will just drop off the program.
Related to the brand image: loyalty rewards must correspond to the quality of the brand. The reward mix should also include a variety of items and should be selected in a way to motivate customers to change their behaviour and increase their spend as they move ahead the loyalty program.
Encourage interaction: last but not least, loyalty rewards should encourage interaction with the program. This usually happens when the reward is given at the point of sale, making the customer feel good at the moment of transaction.
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