The Golden Truth Of Incentive Programs

For Verified Businesses Only

June 2013 Mplifyr © 2013, All Rights Reserved.

Over the years, we’ve been asked the same questions about the ins and outs of Incentive Programs (other names used are loyalty & rewards programs).

We’ve compiled information based on our experience to help bring you up to speed so you can understand and create an effective and winning Incentive Program that works for your business.

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Helping you understand what most businesses don’t know about incentive programs.

“Loyalty Programs can

generate up to 20% of a

company’s profits.” - McKinsey & Company

Why loyalty?

“80% of survey participants

said they buy more from

companies whose

programs they are

members of.” - 2013 Consumer Study Into

Australian Loyalty Programs

“96% of the UK population are members of a

rewards scheme”

- Nielsen Global Consumer Survey

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1. What are Points & Redemptions?

Points (or similar names) are used as a measure of engagement with your business or brand. They act as a “scorecard” to give different benefits to those that engage with you.

Points mean nothing if there is no value associated with them in the eyes of the giver and the receiver. Points are given upon completion of a predetermined action set by the giver, much like during an examination for answering the right questions. The benefit to the receiver is a combination of benefits from the giver, social recognition or some other tangible or intangible benefit.

Redemptions are items, services or benefits that customers can receive in exchange for the points they have earned. For example, gift cards, access to concierge service, cash, etc.

2. How does loyalty relate to games?

Creating an Incentive Program is like creating a game for your clients. The business receives valuable benefits such customer and product/service data that can be used to generate

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business growth. The value customers receive is the benefits they receive by being a part of your program. You first have to identify what you want your clients to do and provide them with incentives to do so. Incentive Programs require you to quantify or measure how much incentive and benefit to give and to whom.

3. The single most important factor in loyalty is…

Status. The greater the status (intangible benefit) offered to clients, the less you have to spend on items/services that clients can redeem their earnings for.

For example, high-status members of Qantas’ customer loyalty program most likely won’t redeem their points for items/services so they can stay in the highest tier and continue to receive exclusive benefits such as free lounge access, upgrades, etc. This means more to them than tangible goods and services. It is not uncommon for high-tiered members to simply purchase a flight (without the need to fly somewhere) in order to remain in the top tier.

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4. Emotionally engaging customers is key.

There are many tools used right now for generating engagement, such as Facebook, Twitter, LinkedIn, mplifyr, effective customer loyalty products and so on. Each product is used differently and a plan for these must be tailored. One size fits all doesn’t work.

What is even more powerful is emotional engagement, such as offering rewards that are not available to all members, special treatment, unique experiences and personal recognition. A tool offering this powerful weapon is paramount in an Incentive Program and creates a competitive advantage for any business.

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5. Incentive Programs are not for everyone.

At mplifyr we started with a premise that in some ways a customer Incentive Program is beneficial to every business. However, our experience in the field shows us that we were wrong.

Effective programs provide an amplified value to your product or service in the eye of the customer. They act as a differentiator and are not for products or services that are entirely unique or of grossly unequal value when compared to a competitor’s program (e.g. Apple Computers).

It also does not work for consumer-facing businesses that are high traffic and where time is so constrained that there is no net benefit (for example, a food court in a shopping centre.) These businesses might use a lower-end engagement program such as a Buy 10, Get 1 Free, social media and so on. It is important to understand your business and goals before launching into a program.

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6. The pitfalls of implementing Incentive Programs.

Effective incentive programs do not provide quick benefits. Beware of programs that guarantee customer loyalty quickly through a program. It is a trial and error process that requires customer uptake and that is generally a learning curve for businesses.

A successful Incentive Program’s goal is one where you can systematically drive your clients and their friends to your business when you want them to and interact with you the way you want them to whether or not they are predisposed to do so. Most companies with loyalty programs fail to understand this and therefore operate a substandard program.

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