10 Aug 2023
Talon.One loyalty expert
In the current economic climate, protecting margins has never been more important. This focus on profitability is also affecting customer loyalty strategy, with many retailers moving away from simple earn and burn programs to instead include more non financial rewards into their programs. If done right, these are powerful - not to mention margin-sensitive - ways to boost emotional loyalty and repeat purchases, with McKinsey data showing that customers who have a great experience with a brand will spend 140% more than those who had a poor past experience.
In this blog post, we’ll explore what makes non financial rewards so powerful, how they build long-lasting emotional loyalty, and outstanding examples of rewards from brands around the world - as well as how to build them in Talon.One.
Reducing the financial benefits of their loyalty program is for many retailers a plausible solution to save budget. However, it can backfire if you can’t replace them with meaningful, experiential rewards that are compelling to the user and affordable for you to run. These rewards can help you weather through an economic storm because:
They foster attitudinal commitment. Non financial rewards go beyond monetary rewards to build enduring memories and deep emotional bonds, providing the psychological attachment that’s necessary to nurture attitudinal commitment. Especially during a downturn, where customers are more likely to switch brands, retailers need to capitalize on the depth of emotions their rewards inspire among members.
They’re relevant to all stages of the customer journey. From acquisition, conversion and growth to retention and reactivation, incentivize customer actions with relevant non financial rewards such as exclusive experiences, personalized newsletters and more.
They reduce logistics costs. By incorporating non financial rewards, you can significantly reduce logistical costs while building brand love. Sourcing and delivering thousands of goods and gift cards that members can earn by redeeming their points comes at significant cost to your business.
"Loyalty program operators tend to avoid directly sourcing and warehousing thousands of consumer goods and hundreds of gift cards for their members. This is not their core capability and would involve significant incremental cost to the business."
Author of Loyalty Program: The Complete Guide
Below, we’ve gathered 8 remarkable non financial rewards for loyalty programs, with examples for each use case from leading companies around the world:
One of the most important - and easiest to incorporate - non financial benefits in a loyalty program is giving members early access to deals. Some programs limit this feature to their top tier, motivating members in lower tiers to increase engagement and spending with the brand.
Our tip: During seasonal discounts such as Black Friday or Boxing Day, early access to deals is extremely popular among members while costing almost nothing for the business to run.
Walmart is one example of a retailer that leverages early access to deals to drive sales and increase engagement: Walmart+ members can shop online Black Friday deals 4 hours before everyone else.
Manufacturing exclusive product bundles, for example, by combining specific beauty products or food and drink products, is an effective way to upsell and cross-sell items. You can also build personalized product bundles for your top customers based on their preferences and shopping history.
The Body Shop offers its loyalty program members exclusive product bundles called Lucky Bundles. These bundles usually come with head-turning discounts which encourage non-members to join the program - although not all discounts need to be so steep.
Creating exclusive bundles in Talon.One is easy - in your campaign manager, simply define your bundle definitions, including the name, number of items in the bundle and any other optional attribute, for example, if you’d like to offer your bundle with a discounted price. You can see what this looks like in the example below.
Non financial rewards will be more effective if you add a personal touch to them. Offering exclusive workshops to your top customers is a great way to replace standard rewards with highly personalized experiences.
British retailer John Lewis runs a loyalty program enabling loyal customers to enjoy member-only offers such as crafting tutorials and cooking workshops.
For high-value customers, creating the best possible experience is crucial - and this extends to customer support, too. Developing an innovative approach to customer support can enrich interactions between a brand and users, helps build brand love during critical or stressful moments, and upholds a feeling of exclusivity for members.
Luxury brand Burberry has created an outstanding VIP customer support strategy. They partnered with Apple on a service called “R Message,” which lets VIP customers chat in real time with customer service agents while staying within the Burberry app. They can also contact their assigned associate to make an appointment in store.
Our tip: Place members or high-spend customers in a priority customer support queue so their issues are resolved faster.
Depending on your industry, you can use a variety of innovative non financial rewards at low operational cost. For this, you need to know what a seamless experience looks like to your target audience and how you can create that experience without exhausting your financial resources.
German carsharing company Share Now offers a range of non financial rewards that are margin-sensitive but still resonate with users. Their bonus reservation time reward, for example, allows members to enjoy longer reservation time on top of the usual free 20 minutes. Other non financial benefits include VIP customer support, bonus hourly rates, special partner offers and overnight reservation.
Another effective non financial incentive for loyal customers are invites to exclusive events that your brand holds or sponsors. In terms of end-user value, these premium invites are high-value offers while a basic discount is considered to be low-value.
Sephora’s Beauty Insider is one of the most popular loyalty programs in the world. Members of the top tier, VIB Rouge, enjoy exclusive benefits including early access to limited edition products and invitations to monthly events where they can interact with beauty and wellness experts, influencers and visionaries.
Businesses are increasingly using gamification to boost brand awareness, drive customer loyalty and engagement, increase sales, and everything in between. While in many cases players can redeem points for free items or discounts, there are examples of incorporating simple quizzes and games within the user flow to create a fun experience for users.
British consumer health company Haleon used an interactive quiz for one of their brands, Centrum, to help consumers find the best vitamin offering based on their individual needs. Consumers answered a series of questions and received bespoke recommendations.
You can connect your rewards to ESG (environmental, social and governance) causes, encouraging members to think of loyalty benefits in a broader, more sustainable way.
American retailer Kroger has a special category for community rewards. Members can link their Shopper’s Card to the local organization they wish to support, playing a positive role for their community with each transaction.
Using Talon.One webhooks, you can automatically trigger a reward in any system when certain criteria are met. For example, you can donate 6 cents per point earned by a member. Here's what that looks like in the Campaign Manager:
Nurturing customer loyalty isn’t a one and done project, and instead needs to evolve over time. Different economic climates require different approaches to customer loyalty - but none should stop you from rewarding your customers for their attachment to your brand. The key is to find the right balance between financial and non financial rewards to keep users engaged while managing the operational cost of the loyalty program.
Keen to pinpoint the best loyalty strategy for you and your customers? Check out our report, Building genuine customer relations through loyalty.
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