Thank B2C & B2B Customers for Loyalty

Consider saying 'thank you' to B2C and B2B customers as a worthwhile business investment. Whether or not you realize, a thank you message contributes  to customer loyalty & retention because, when done very well, good customer communication provides a positive customer experience (CX). Consider one of my experiences. Some time ago, I needed to place an order but did not want to proceed until my supplier had a second (less important) item in stock that I can add to the order, in part to justify the shipping costs. For a few weeks, the sales person apologized repeatedly for not having yet received the second item as promised. The situation became awkward. When I could no longer wait until the continually delayed second item was stocked, I ordered the single item anyway and just grit my teeth over the shipping costs. When I opened the package, I was delighted! Although my single-item order had been for a half - kg bag, a 2 - kg tub was shipped along with a bright blue bow. The gesture was the sincerest way to tell me 'thank you for your patience and choosing us' ... not in words but in action. Perhaps the surprise came in part too because I these were hardware products, not even your touchy feely, 'wrap it in tissue paper' type of products where that type of gesture is more common. Ultimately, the feeling of having my expectations exceeded ... and that silly, imperfectly tied bow have left an indelible mark on my mind. I felt endeared to this company and staff. 

Since all 'thank you's are not delivered equally, consider the following DO's and DON'T's to make your 'thank you' count. 

DO'S

• Start with a personal salutation along with your customer's name. Avoid just saying 'Hi' before launching into the message because that approach seems like a template note. It also sounds more personal to use the salutation rather than only the customer's name. Examples: "Hi Pete", "Dear Pete", "Hello Don Pete" sound more personal than just 'Hello' or 'Dear customer'.
• Pursue the perfection in imperfection. Handwrite the note. Your imperfect handwriting is perfect, much like the un-fancy, imperfectly tied blue bow was in my case. If you use electronic media, do not use a Tina Turner GIF meme saying 'You're Simply the Best!'. Allow your imperfect and scratchy voice to say, sing or, God-forbid, dance to it.
• Use simple, non-branded material. Some businesses have a basic notepad that only has printed something like "thank you for choosing us". However, the salesperson can then include a handwritten note that is personal. Design and set aside stationary for this purpose as it is a worthwhile investment.
• Make the message feel personal in part by referring to your interaction, particular product selection. Whenever possible, be specific. Use calls to actions (CTAs) when appropriate or possible to encourage ongoing engagement.
• Hi Penny, Thanks for choosing Product X. Please tell me how you find it. Take care, your personal representative [CTA], Paola.
• It was a pleasure working with you today.
• Thanks for being such a loyal customer.
• As I mentioned in our meeting, call me if you need any further help understanding how to use the product.
• Thanks again for your support. I am keen to hear how you find product X [Implied CTA].
• I really hope you enjoy product X as it is one of our best sellers and, since I have the same [pain point] as you, my personal favorite. But please tell me how you find it [CTA].
• Your profile caught my attention because of our common problem with [pain point (like oily skin)]. This product worked very well for me personally. I also wanted to slip a sample of another product that also worked when I experience [related pain point (like the odd pimple). No obligation! Tell me if you like it or would rather try other samples[CTA]].
• As my case shows, use saying 'thank you' to turn around an otherwise bad customer service situation. This is a great way of handing customer complaints, even when customers have not voiced them (as in my case above).
• When possible, let your actions speak louder ..... In my case above, I never logged a complaint over their customer service fail. We never discussed what had gone wrong. However, we both knew what went wrong. An outsider looking on at the end would have just assumed that I was lucky to have just out of the blue gotten free product because I had not even received a note. In fact, all of these circumstances feel all the more sincere to me than words ever could have. 
• Keep 'thank you' notes short, preferably under 50 words.
• Say 'thanks' for things that convey relationship building (over transactions) like 'your support', 'choosing us'. OR say 'I really appreciate ...your support'.
• Include the note in the customer's package
• Even B2B thankyou notes should be personalized. Examples:
• Dear Jose, 

Our discussion today have left me feeling more confident about our partnership in the X program. Thank you for highlighting how your team can work with us to improve __. We look forward to working with you in the foreseeable future.

Thanks, Rebecca.

• Hi Jake, Thanks for buying from us. My industry is quite saturated with other manufacturers of the product same type (X). I am therefore thrilled by your decision to buy from us. Thank you for your support. We look forward to working with you. 

• Dear Hazel, 

I just noticed that you recently stocked up on the new product X. Thanks for that. Please tell me how your customers like it.

I wish to show my appreciation by offering you this "preferred customer" code 'Hazel10'. You can use it to get a 10% discount off of your next order (of any product). 

Thanks once again. Looking forward to getting your feedback.

Rebecca.

• End the message in a personal way. Examples:
• Take care, Jane
• Sincerely, Jane
• Saludos, Juanita

DON'TS

• You may have gathered the common message running through the various points is to personalize your message as far as possibble. Consequently, this point serves to reinforce that point. Specifically, avoid sounding transactional wih wording like 'thanks for' the 'business', 'patronage', 'order' and so on. These word choices are too impersonal and sound like you see the customer only as a number and are happy only to get their money.
• Similarly, avoid a sales pitch. Remember, your aim is to simply say 'thank you', knowing that sales will come as a consequence.

CONTENT RELATED TO SAYING THANKS TO CUSTOMERS

• Learn more about loyalty / retention marketing.
• Managing customer complaints.

B2B Customer Loyalty Rewards Programs

Before this point, various posts about loyalty & rewards followed the common trend of discussing such programs within the context of B2C relationships. This installment will change that.

Regardless of your customer type (whether consumers or businesses), it is always more costly in finances, time and other resources to acquire new customers than to just continue selling to your current customers. In fact, the investment in the customer acquisition process is greater for B2B for several reasons. For instance, B2B relationships involve orders with higher values and as a consequence, the decision-making process often involves more of your business customer's team members to analyze your offer as their order value increases. This challenge and value of each acquisition is even greater because fewer B2B customers exist.

Provide a professional onboarding experience

Onboarding involves the collection of experiences that your customer has when they are new, usually after the first sale. The process is introductory in nature and usually involves giving new customers a tour of what you offer. Among other things, they may include your GT&Cs, FAQs, product pages, contact details of a dedicated representative and onboarding buddy, introduction to live chat and other means of being in contact, invitation to the loyalty rewards program and so on.

Prepare to Offer a Superior B2B Customer Experience (CX) 

Just imagine how, if you are upstream within your B2B customer's supply chain, your efficiency, trustworthiness, reliability and so on can literally make or break their reputation and, in turn, commercial wellbeing. I previously created a list of Customer Relationship Management (CRM) practices to improve the wholesale B2B customer experience. While these practices do not require the active involvement of B2B customers in an official program, they essentially contribute to loyalty and should definitely be included in your practices regardless.

DO's

• Understand your B2B customer's buying process and figure how best to improve their sales velocity. 
• See list of Customer Relationship Management (CRM) practices
• Explain the benefits of your practices. Be sure they understand. For instance, explain the value of polices like having a MAP price. See reasons for many CRM practices for wholesale customers.
• Engage in data mining to understand, anticipate and proactively respond to B2B customer needs.

Self-Help Center that Answers Questions

Provide access to resources like GT&Cs, FAQs, full product page listings, complaints and more. These resources can be linked to the automation of your live chat system.

Incentives-Based Loyalty & Referral Programs

Design the program in a way that is attractive to B2B customers and your brands. Clearly, gamification and rewards points are unlikely to impress most B2B customers (as they do B2C consumers). 

Examples

• B2B customers can earn rewards via the following. Do NOT be shy about what you want B2B customers to do. Give clear, unambiguous Calls to Action (CTA) and explain how your customers are due to gain in return.
• reviews
• referrals
• answering questions in product support forums
• If customers pay 100% cash within x days, they get y% off,  add-ons.
• Other B2B benefits involve exclusivity marketing like 
• early access to new product features
• market research that is only available to existing customers
• opportunities to be involved in beta testing, or more personalized support.
• inclusion as an 'additional insured' on your business' certificate of product liability insurance policy for only authorized retailers.

CONTENT RELATED TO VISIT-BASED AND SPEND-BASED LOYALTY REWARDS PROGRAM

• All things B2B
• The B2B buying process
• As consumers change, so too should loyalty rewards programs in order to be successful. Here's how.
• How using tiered loyalty rewards programs can be a game changer.
• What's the point of having a great loyalty rewards program if no one can understand it? Let's talk how to create a loyalty rewards program explainer page.
• The case of Starbucks' change from a visit-based to spend-based rewards program. In the new spend-based system, customers needed to spend $1 to earn 2 stars and could redeem star points for a free item when they had accumulated 125 stars. Previously, customers received a free item after 12 visits (regardless of the items bought during the 12 visits and without restriction which drink they could select as the reward). In the old visit-based system, lower value customers were earning roughly 4 times more than higher value customers. However, Ultimately, after the new spend-based system, higher value customers earned roughly 50% more than before, lower value customers lost over 60% and Starbucks saved considerably.
• The calculations involved in your point system can easily become hard to understand for the average customers. See how to introduce your program in an attractive and digestible way with explainer pages.
• Measure the success of your loyalty rewards program.
• Incorporate a referral program into your loyalty rewards program. These 2 types of program complement each other. While the loyalty rewards program seeks to retain customers, referral programs seek to acquire new customers.
• Analyze how well your rewards catalog has been curated.
• Gift card programs may be designed to be stand alone or an integrated component of your current referral and or loyalty rewards programs.

Store Gift Cards

A gift card, also known as gift certificate (in North America), gift voucher or gift token (in the UK) or tarjeta regalo (in Spanish) is a prepaid money card or prepaid debit card with a specific money value. It can be used as an alternative to cash for purchases at a particular store or any one of participating stores. Customers are commonly encouraged to buy them for friends as gifts for birthdays, graduations, and many other gift-giving occasions.

This post discusses types of gift card, the use and benefits (mostly from the retailer's perspective), market trends and tips for applying the trends and best practices.

There are two main types of gift cards; 1) cash cards and 2) store cards. Cash cards aka 'open loop' gift cards include Visa, MasterCard and Vanilla gift cards. They allow holders the flexibility to redeem the cards at any of the numerous stores participating in the payment programs by these brands. They are better for gift givers who do not know the recipient's tastes sufficiently well to select the alternative, ie a store card for a single brand. Specifically, store cards aka 'closed-loop' gift cards can be redeemed only at the store of a single retailer. Consequently, these cards are more suitable for gift givers who have more intimate knowledge of the (potential) brand preferences of the recipient. This post will focus exclusively on the latter, ie store or closed-loop cards.

Gift cards may be sold through multiple distribution channels. For instance, apart from being sold from the brand's outlets (online and or offline), cards may even be sold by third party retailers who can benefit from gift giving market trends. For instance, when compared with other industries, restaurant gift cards have been observed to have the single highest demand (Blackhawk Network's survey on "How America Gives Gifts in 2016'). It is therefore not surprising that Walmart has a large specialty floor point of purchase (POP) display dedicated exclusively to gift cards mostly from numerous restaurant and coffeehouse brands. To a lesser extent however, gift cards from other industries are also sold on Walmart's racks from Google Play cards to Apple Store & iTunes, Nintendo and so on.

This third party distribution trend also occurs online. Example: Amazon sells many of the same restaurant gift cards along with so many other brands and options that make the gift card product very competitive. 

Amazon offers a wide array of gift card products across many industries and brands, even those (like Apple) that had been historically very exclusive in their distribution.

   

The width and depth of online options (highlighted in red above) from just Amazon alone are so awesome that the offerings of this juggernaut can leave many small business owners feeling intimidated.  

Unlike cash cards, store cards usually retain more or all of their full face value. (Cash card holders are often subject to charges for services like monthly maintenance fees that whittle away the value of the card if unused over time. Other cards have fixed 'purchase fees' that the buyer pays upfront at the point of sale). For this reason, store cards may attempt to differentiate themselves by specifying on their packaging that there are no purchase or other fees). Furthermore, store cards are less likely to have expiration dates. 

Uses & Benefits of Store Gift Cards

• They can be used for any type of business as any (consumer) business offering is giftable. Consider who benefits from your product, when and how and develop a gift card program accordingly. For instance, pens can be gifted to parents during the back to school rush (possibly bundled with other related products), a plumbing business can sell gift cards that will be gifted to new home owners and so on.
• They bring more business. 
• Gift cards are often used by retailers wanting to promote loyalty.
• Gift cards promote brand awareness and new customer acquisition. Existing customers who give friends and family gift cards are essentially providing a 'referral' service to persons they know and believe are a good fit for your business. When given as a gift to new customers, it encourages new customers to go through your product catalog and personalize their gift accordingly.
• Many shoppers exceed the value of gift cards.
• Gift buyers value convenience over uniqueness, especially when they are running out of time. 
• Sellers benefit from the immediate cash flow, regardless of whether or not customers redeem the card. Besides, customers often lose cards, forget about them, or do not bother to redeem small remaining balances. Note however, depending on your local revenue department, the un-redeemed card value called 'breakage' may be due to the government. You must therefore check the rules that apply to your business. Note that gift cards are a business' promise to deliver products at a later date and may therefore be required by law to be documented as a company's liability (or loan). It is no wonder governments may prefer to enforce transfer of these funds to them so as to prevent unscrupulous businesses from making it hard for customers to redeem gifts.
• Store gift cards are an intimate gift because (unlike cash cards,) they demonstrate that the giver has personal knowledge of the interests of the recipient. This is therefore ideal for brands that sell personal products
• Be creative. The pandemic lockdown may pose promotional Covid-19 marketing solutions - opportunities through gift cards. In addition to abovementioned benefits like customer acquisition, brick-and-mortar businesses may consider promoting gift cards for curbside pickups, home deliveries, special day visits and so on to show appreciation for health-care workers, the elderly, teachers, friends in need and so on.  

Relevant statistics related to gift cards

Use for giving to others or oneself

• 42% of consumers surveyed purchased e-gifts for both e-gifts and self-use. 
• Re self-use, 78% would purchase an e-gift for self-use if it were offered at a discount, a finding of particular interest for retailers wanting to encourage egift adoption. Other cited reason are to rewards collect points and to use the card to shop online.
• Re gift-giving, the purchase motivation factors with the greatest probability include delivery in minutes (45% of respondents), delivery notification (39%), ability to include a digital greeting card (28%). (Blackhawk Network’s study on consumers’ usage, adoption of and sentiments toward egifts)

Demand for cards ranked by industry

• Gift cards are purchased in numerous types of retail businesses, the top 3 being restaurants, credit cards and department stores. See the list of others below. How popular do you estimate gift cards will be in your business? (Blackhawk Network's survey on "How America Gives Gifts in 2016')

1. Restaurant gift cards (41%)
2. Visa® Gift Cards, MasterCard® Gift Cards and American Express Gift Cards (31%)
3. Department store gift cards (28%)
4. Coffee shop gift cards (21%)
5. Specialty clothing, shoes, apparel and accessories gift cards (19%)
6. Entertainment/movies gift cards (19%)
7. Electronics store gift cards (18%)
8. Book store gift cards (14%)
9. Salon/spa gift cards (11%)
10. Home improvement gift cards (10%)
11. Sporting goods gift cards (9%)
12. Gas station gift cards (8%)
13. Grocery store gift cards (8%)
14. Discount store gift cards (6%)
15. Home decor/housewares gift cards (5%)
16. Office supply gift cards (2%)
17. Other (3%).

E-gift vs plastic cards by generation

• Gen X and baby boomers prefer to redeem plastic gift cards. Conversely, millenials prefer e-gift cards.  (National Gift, 2016)

Re Small business gift cards 

74% of consumers surveyed said they regularly buy gift cards from small businesses. The study also found that

• 90% of consumers who receive a gift card from a small business they had never visited previously said they would shop at that business and return there in the future
• 56% of surveyed consumers join loyalty or frequent shopper programs at small businesses. The same group said gift cards are the preferred way for their loyalty to be rewarded

 (Fiserv Small Business Study,2019)

Most common tentpole marketing opportunities 

Top times to buy a gift card include:

• Birthday (67%)
• Holidays (44%). This relates mostly to "winter holidays like Christmas".
• Thank You (25%)
• Graduation (22%)
• Mother’s Day (21%)
• Congratulations (21%)
• Just Because (20%)
• Wedding (17%)
• Anniversary (17%)
• Valentine’s Day (16%)
• Reward for Someone (14%)
• Father’s Day (14%)
• New Baby (13%)
• Housewarming (7%)
• Work-related Reward (7%)
• Easter (7%)
• Back to School (5%)

(Blackhawk Network’s study, 2018)

Overspending gift cards

59% of consumers surveyed usually spend more than the card's value. (Blackhawk Network’s study, 2018). Several studies have had similar findings. Even market research conducted as far back as 2010 showed the same pattern of overspending. (First Data, 2011). It is therefore reasonable to assume that this trend is consistent and likely to persist.

Top gift card givers

Men have been observed to be repeatedly more likely than women to buy gift cards. (NRF, 2015)

Top gift recipients 

Close family member (73%), Friend (49%), Extended Family Member (37%), A Child Other Than Your Own (19%), Colleague, Employee or Boss (18%). (Blackhawk Network’s study, 2018)

Average number of gift recipients 
Shoppers surveyed plan on purchasing gifts for eight people on average, estimating they will spend a total of $618.93 in 2019. (Blackhawk Network, 2019 on holiday shopping)

General information & areas of potential controversy 

Second only to questions about the size of the gift card industry are questions about unused gift cards. The US media are often fixated on who profits most from lost, stolen or forgotten gift cards.

Regarding unused gift cards, roughly 3% (CBS News Report, 2020) or 2% to 4% (Mercator Advisory Group) of gift cards are never redeemed according to an estimate from the Mercator Advisory Group in 2019. 

Regarding how to allocate (aka 'escheat') unused balances (aka 'breakage'); 

• 75% of people surveyed (68% of men, 81% of women) said they ALWAYS use the gift cards they receive. 20% of people surveyed (23% of men, 17% of women) said they forget to use the gift cards they receive. (GiftCards.com, 2018)
• 42% of consumers redeem their gift cards right away. (Blackhark, 2018)
• 42% of persons who do not use cards immediately watch and wait for good sales or promotions to maximize the value of their gift card. (National Retail Federation, 2018)

Tips for designing a successful gift card program

• Sell your gift cards through multiple channels that include your brick-and-mortar store, online, other non-competing retailers.
• Advertise that you sell gift cards both in and outside your store. Gift cards have the potential for the acquisition of 2 new customers, they buyer and seller. In short, advertise your gift cards as a gift giving solution for gift buyers.
• Improve your online shopping platform. This is especially noteworthy within the context of using gift cards as one of your Covid-19 solutions.  
• Use gift cards over gift certificates. Gift certificates are the same concept as gift cards, except for their physical presentation. Specifically, certificates are printed on paper or cardboard. In contrast, gift cards are usually printed on plastic cards and usually have a magnetic stripe to transfer information into the POS system. Apart from being less susceptibility to wear and having a more professional presentation (more suitable for premium brands), gift cards outsell gift certificates between 35% and 100%.
• Prepare to up-sell, cross-sell and offer add-ons to gift card shoppers as their tendency to be less price-sensitive while shopping with 'someone else's money' makes them more likely to spend more than the value of the gift card.
• Integrate gift cards into your loyalty rewards program. Here are 2 meaningful ways. 
• 1) Encourage recipients to join your loyalty rewards program, perhaps delighting them with points (for signing up). This will also provide you with the opportunity to market to that person, ie customer relationship marketing. 
• 2) Allow customers to earn points for redeeming gift cards. By awarding points for their activity, customers are incentivized to earn further points for to earn rewards. Additionally, if your program expires points for inactivity, it ensures that customers are not penalized for having engaged with your brand without their own cash.
• Offer value to buyers in the form of convenience with gift wrapping. Research shows that convenience is one of thre greatest forms of perceived value in gift cards for gift givers. Example, Both Amazon and Sephora gift wrap their gift cards, a convenient service that no doubt earns them a premium, especially since convenience has been shown to be of great value to gift givers (over uniqueness), especially at the last minute. Specifically, the gift wrapping allows the giver the luxury of having already very presentable gift that is immediately ready for presentation to the recipient. The gift wrapping is arguably targeted more to the buying giver than the receiver. 
• 

  
  
• Offer add-ons labelled 'bonuses' that exceed consumer expectations and differentiate your brand's gift. Example, Sephora's website explains that the gift card comes includes "Includes a sleek, black, dual-mirrored compact, embossed with the Sephora logo and a gift box." 
  

Example: The Cheesecake Factory gift card package for $50 includes a bonus of 1 free slice of cheesecake. 

Example: Red Robin offers a '$10 bonus buck'.

If funds are a current challenge that prevent that level of generosity, even consider points in your loyalty rewards program.

• The cards may be sold singly according to dollar value and or in packs of several cards, often 3). While research shows that many people buy gift cards for multiple recipients, it also shows that many people buy gift cards for themselves. Take advantage of volume sales, including bonuses which gift card buyers may enjoy themselves, even if they use the volume package in a type of 'give-to-get' fashion increasingly encouraged in many referral programs. Also incorporate abovementioned consumer bonuses to this end.

• If possible, provide the option between 'eGift' cards and 'physical cards'. Example: The Cheesecake Factory provided this option to customers on their website.

  
  
  
• Consider the statistics that relate to tentpoling, industry, top gift recipients and consider if and how your product's type applies. For instance, personal care products like cosmetics can great gift ideas for birthdays of close family members and friends, a non-surprising trend observed in Sephora's loyalty rewards program since that company sells cosmetics, a product in whose interest only persons in close relationships can predict. When customers sign up, they have the option of providing their birthday in order to receive a gift card.
• Whenever possible, use eGift cards. This method makes it easier to encourage both the giver and recipient to give up their contact details.
• Although gift card programs can be set up with relative speed, give yourself sufficient lead time to train staff and figure the best strategies before the heavy period.
• Build relationships through data collection. When customers (the giver and recipient) sign up with their contact details, use their information to invite them to receive email newsletters and special offers. You can also prompt them to redeem forgotten cards and so on.
• Reward loyal customers, even if you do not have a loyalty rewards program. Consider sending gift cards to best customers that you have not seen for a while but would like to get back.
• Use gift cards to boost sales during slow selling periods. Selling gift cards just before slow periods is one means of doing this. Christmas gift cards are therefore useful in this regard. Black Friday sales might promote Christmas shopping for industries that usually see slow sales during Christmas (like health care). Otherwise, you can also promote special gift card weeks or weekends. This is a common practice in January when Christmas shopping has ended.
• Compete with big stores (like Amazon). Celebrate and stress the uniqueness and ability to personalize in your niche. Even Amazon is unlikely to offer competing gifts, like a unique tour experience through your facility, a gift within your rewards catalog of unique and local experiences. 
• Use gift cards as an alternative to issuing refunds. This encourages the customer to keep their investment in your brand. Besides, this practice also combats fraudulent behavior in which thieves steal merchandise (like possibly the same thing they had previously bought) with hopes of getting a cash back refund (upon presenting a receipt).
• Donate with gift cards to fundraisers. This encourages the recipient to return to your store as opposed to when the recipient of cash or merchandise may never return to your store.
• Reward top performing employees and sale persons with your brand's gift cards. This helps to keep the money in your business. Not to mention, it can be a less costly approach because the cost to you is closer to the cost of producing the product than the sale price of your product or another retailer's products at sale price. 
• Learn how tax and other law applies in your area. 
• Outside of breakage (discussed previously), laws may also apply to the types of fees you may or may not charge and the period over which such fees may apply. 
• Learn all of the rules. For instance, activation fees are often allowed IF the fee amount and explanation of its determination are clearly disclosed before purchase. 
• Can customers redeem cash? Some places (like California) allow cash redemption for gift card balances below $10. 
• Disclose details about expiration. 
• If you are also running a referral program with a give $x and receive $x (after the customer spends $x), I suggest making the gift card option more attractive regarding the type of reward for the giver, like give $x+1 and receive $x+1 or well valued non-monetary reward. Since the customer's investment and the rewards for both the giver and receiver are greater and likely to be more immediate for an overall better customer experience, your programs will appropriately reward customers and motivate more profitable customer practices.
• Proactively counteract gift card fraud in whatever way possible. Gift card fraud has become a big problem. Some scammers copy the code from the back of the card. When the codes are hidden, requiring someone to scratch of the concealer, scammers figure out the codes using algorithms. Some small companies are so small that they manually manage the card use, even logging details on Google Drive and sending card inscription details, balances and transactions via direct text messages to customers' registered mobile phone.  

CONTENT RELATED TO GIFT CARDS

• Store gift cards may exist alone or as part of a loyalty rewards and referral program. See how to design referral programs to increase your business' customer acquisition potential and loyalty rewards programs to increase customer loyalty and retention.
• See a marketing guide PDF by First Data 
• Random facts
• Most retailers do not allow customers to exchange store cards for cash (ie apart from the requirements of some governments regarding small unused balances).
• Not all stores record the customer-related data of card holders. Consequently, it is sometimes possible to transferred ownership of cards to whomever holds them.

CONTENT RELATED TO GIFT CARD PROGRAMS

• Why the old 'earn and burn' loyalty program model is failing and a new approach for modern consumers.
• Tiered loyalty programs
• Use spend-based loyalty rewards programs to give greater rewards to customers with the highest customer lifetime value (CLV) ... and reduce costs while you are at it. 
• A great loyalty rewards program can not help your business if customers can not understand it sufficiently well to sign up. Create a loyalty rewards program explainer page.
• Incorporate a referral program into your loyalty rewards program. These 2 types of program complement each other. While the loyalty rewards program seeks to retain customers, referral programs seek to acquire new customers.
• Analyze how well your rewards catalog has been curated.
• Shopping wishlists (gift registries) may also help to promote gift giving while also providing the opportunity for new customer acquisition.
• Case studies:
• Amazon
• Cheesecake factory
• Starbucks

Rewards Catlog for Loyalty Rewards Programs

The rewards catalog is a critical element of any loyalty & rewards program whose design can predict the level of customer participation and ultimately the program’s success. If you consider it a type of product you offer, you will appreciate just how much it needs to add 'excitement value' to your target market. 

Since the rewards catalog is the reason that customers participate, a cardinal sin is to relegate its curation to an afterthought. As with any other product, it requires due research and development, testing and responsive adjustments. 

The stakes are high! A mild negative reaction is one of 'redemption inertia', ie a situation in which customers do not bother to redeem rewards even though they have accumulated sufficient points. In such a case, customers likely find the rewards unattractive. However, in the worse worse case scenario; the failure of the program will very likely adversely affect future initiatives.

Here are factors that affect customer engagement and, in turn, the effectiveness of a rewards catalog. Also include them as your program's key performance indicators (KPIs).

• Level of 'excitement value' to the target market
• Inclusion of 'big' / aspirational rewards and the perceived level of their attainability. Aspirational rewards relate to those aspirations that help customers achieve some type of social prestige and perceived success. If well conceptualized, aspirational rewards can create much needed 'excitement value' for your program. Additionally, these rewards must be deemed attainable in order to prevent the lack thereof from depressing engagement among customers who feel that there is no point in attempting to earn the big rewards. Example of aspirational rewards: Exclusivity marketing in the airline industry creates strong aspirations for first class airline tickets. 
• Level of variety of rewards.
• Reward intervals. Reward intervals relate to the time period it takes to gain some reward. If reward intervals are too wide, members will become frustrated. 

DOs & DONTs

• Create customer segments based on psychographic classifications that help you to personalize your interaction with each customer. For instance, incentivize customers to provide this information during their account signup.
• Analyze member distribution re tiers, reward price tolerances, etc. For instance, many rewards catalogs allocate a single price to a group of reward items. In other cases, modern programs also have distinct tiers. What is the distribution of members according to their price tolerance in points? What is the average redemption order value per group? What are each group's key performance indicators (KPIs) regarding the loyalty rewards program in general?
• Analyze and adjust the distribution of catalog items according to past and current data based on details that include the following.
• most redeemed items
• most ignored items
• Are the prices in points of items related to their redemption rates? If you changed the rate, was there a 'reservation price' in points?
• Analyze the meaningfulness of attainable aspirational rewards. Customers need something for which they strive. Analyze the information on individual member profiles along with their ability to earn points to determine whether their attainable rewards can offer sustainable 'excitement value'.
• Wherever possible, provide fun participation.

CONTENT RELATED TO REWARDS CATALOGS FOR LOYALTY REWARDS PROGRAMS

• Why the old 'earn and burn' loyalty program model is failing and a new approach for modern consumers.
• Tiered loyalty programs
• Use spend-based loyalty rewards programs to give greater rewards to customers with the highest customer lifetime value (CLV) ... and reduce costs while you are at it.
• A great loyalty rewards program can not help your business if customers can not understand it sufficiently well to sign up. Create a loyalty rewards program explainer page.
• Emotional advertising; deeply personal emotional triggers
• Measure the success of your loyalty rewards program.
• Incorporate a referral program into your loyalty rewards program. These 2 types of program complement each other. While the loyalty rewards program seeks to retain customers, referral programs seek to acquire new customers.
• Brief overview of loyalty and evangelism as they relate to the sales funnel.
• Gift card programs may be designed to be stand alone or an integrated component of your current referral and or loyalty rewards programs.
• Using brand storytelling for evangelism

Subscription Box Marketing

Subscription box subscriptions deliver your product or service direct to your B2C customer. When customers signs up, they periodically receive a delivery of your goods and or services that are based on a theme, resolve a specific problem and so on. They provide great potential for data-mining / customer relationship management, continual revenue streams, customer loyalty, avoiding new customer acquisition costs and personalization / product de-commoditization.  There are 3 types of subscription box.

Retail subscription boxes. Your customer pre-selects catalog items which you deliver at their preferred intervals. NB. This type of subscription offers the opportunity to easily exceed expectations if you can ocasionally include something completely unexpected. You can combine your primary data (ie details given to you from customers like age, psychographics and so on) with your secondary transactional data (like transaction history regarding order values, returns and other good and bad behaviors). Analyzing these data will help you to finetune your target market profiling.

Mixed subscription boxes. Your customer pre-selects a few pre-selected items that will be included along with other surprise extras. This provides you with considerable flexibility with creativity. However, this requires response to data analysis. Example: Outside of the pre-selected items, a cosmetics company may include makeup application brushes, mirrors, makeup tutorial videos (as an add-on service) and so on.

Mystery aka Black subscription boxes. Your customers have not pre-selected any items. Rather they receive an assortment of products related to a theme.

Measure Success: Loyalty Rewards Programs: Monitor & Control

A loyalty rewards program is designed to promote repeat high value sales. It creates a type of marriage with your customer that aims to keep them from looking elsewhere. Consequently, if your customers are not seeing value in buying again or even enjoying the rewards, your program is likely failing at its objective. 

Measuring customer loyalty is necessary to ensure that you are meeting your goals. Use different metrics to evaluate and adjust your program to ensure that you are growing a staunchly loyal customer base.

This post is concerned with the monitor and control of your loyalty program. Specifically, it discusses different ways of measuring your program's success and offers suggestions for optimization.

Repeat Purchase Rate (RPR)

The repeat purchase rate (RPR) is the percentage of customers that return to make another purchase. The RPR is a great measure of customer loyalty. This information is also useful from the perspective of reducing advertising costs and increasing your bottom line because research shows that repeat customers convert at 12 times the rate of new ones. See how to calculate the RPR below.

It is ideal if you already have a database of customers. Otherwise, your loyalty program will give you that opportunity to begin building one. 

To calculate the RPR, establish the number of repeat buying customers, ie ones who purchased from you again. Divide that number by the total number of ALL customers in your database. Then multiply the result by 100 to arrive at the RPR expressed as a percentage. 

BENCHMARK: 20% to 40% RPR is generally considered a good range. Consider this metric along with the average order value (below). 

Average Order Value (AOV)

The Average Order Value (AOV) refers to how much in dollars customers spend on each order. Some nickname it the measure of 'customer love'. Retailers can benefit a lot by tracking and increasing this metric. For instance, the AOV allows you to see how well you offset customer acquisition costs. Specifically, increasing AOV reduces acquisition cost and therefore improves your return on investment (ROI) re marketing. This metric is ideally considered along with others like the repeat purchase rate / RPR (above). After all, what benefit is there of having high repeat purchases that are too low in value to justify your service? Within the context of the Covid19 pandemic during which time brick and mortar retail businesses worked fewer hours, increasing this metric is helpful in raising overall revenue. 

All the same, the AOV is sometimes useful in evaluating how well your customers are spending on each order. Calculate this metric by dividing total revenue in dollars divided by the number of orders. The AOV is expressed as that dollar value.

NB. Also use the AOV for creating future success. For instance, if they can afford it, marketers may use the AOV as the base for establishing the value of rewards / reward points to offer advocating customers for referring friends. Ideally however, offer this reward to new referred customers only AFTER they have made purchases to ensure that you break even. In other words, the AOV will not only be the reward but also the minimum value of a new customer's purchases required for earning the rewards.

Redemption Rates (RR) for Loyalty Rewards Programs

The redemption rate for a loyalty reward program is the percent of points that have been redeemed for rewards, ie out of all those that had ever been previously earned. See the formula below. The score for 'total points spent' should include ALL points redeemed since the program's launch. That number must be divided by the total of ALL points ever issued since the program's launch, even those that expired. Then multiply the result by 100 to arrive at a percentage.

Example: 

Redemption rate = (15,700 points redeemed aka spent / 103,000 points ever issued, including expired points) X 100 = 15.24%.

BENCHMARK: The average redemption rate for loyalty rewards programs vary around 14% to 20% and above. If yours is lower, consider making improvements.

Average Customer Lifetime Value (CLV) of Loyalty members

An effective loyalty rewards program should boast an average customer lifetime value (CLV) that is higher for loyalty members, ie over the CLV of non members. 

If you have the wherewithal, I would suggest running statistical analyses that compare independent groups like T-tests (for 2 groups) or ANOVA (for 3 or more groups). Although a group will invariably have a higher CLV than another, eyeballing differences is not always useful because such differences are not always to a statistical degree and therefore may not always warrant attention. For help with this, write me, referencing this post and specifying that you need to statistically compare groups.

A statistically higher member CLV suggests that the current program is performing well and deserving of further investment. Otherwise, the program may be based on an outdated approach and need to be redesigned to better adapt to modern consumers.

Active Engagement Rate (within the loyalty rewards program)

As previously discussed, including engagement in loyalty rewards programs has been shown to engender more meaningful loyalty than the old 'earn & burn' purchases-only based loyalty program. The active engagement rate (AER) indicates how many customers are not only participating but 'actively engaged' with your loyalty program. Engagement relates to non-purchasing activities like referring friends and using social media to review your products, comment on your posts and so on. 

To calculate this metric; divide the number of customers who engaged within a period over the total number of customers within the program. To express the result as a percentage, multiply by 100.

Redemption Cycle Time

This metric refers to the amount of time it takes for customers to move from earning to redeeming awards. The rewards must appear attainable.

To calculate this, consider using a calender calculator. Calculate the number of days between the first awarded rewards and first redemption.

Redemption Cycle = Date of redemption - Date of first awarded reward(s) 

BENCHMARK: Your high-value customers should be able to redeem a reward within 3 to 6 months. However, your next most valuable tier should be able to redeem within 6 to 9 months.

DO's & DON'TS 

• Analyze how well your rewards catalog has been curated. 
• Implement monitor and control systems for your loyalty rewards program, not only as a whole but also its components, like the in-built referral program, free shipping and other forms of subscriptions and so on.

Example: Implement some form of data collection. The ideal for those with a sufficiently large budget is to integrate a CRM with the point of sale that tracks all data required to run the analyses.

• To increase the average order value;
• 
  

  establish minimum purchase thresholds that qualify customers to enjoy desirable benefits. 

  Example. Free shipping on orders over $100

• 
  

  offer volume discounts. 

  Example. Get $3 off if you spend $30.

• offer product bundle. 

  Example. Rather than buy only product x, also buy products y and z for an overall lower price of $105.

• cross sell. 

  Example. With that hair brush, you can also get a bag that was custom made to hold it perfectly.

• To improve a low repeat purchase rate (RPR);
  

  Make the program as appealing as possible with multiple ways to earn points and redeem rewards. Also see how to adapt your program can adapt to modern consumer, how to enjoy the advantage of a tiered program and how to design a program so you give more to higher value customers and do not break the bank.

For instance, beyond rewarding for transactions. also reward customers for engagement, interactions, social sharing, health or other goals related to your brand's core values. 

• Provide cues that remind customers to redeem their rewards. Cues may include visual reminders on your website or brick and mortar store. Cues may also include verbal reminders at checkout or other points of contact.

• Encourage frequent participation. The earning rate and frequency of participation in general have been shown to relate to a customer's redemption rate. 

  Example: Send messages to customers who have been inactive over an extended period. 

• Just as you would with new or pre-existing products, promote your loyalty rewards program. Ensure its memory is alive and well in the minds of your customers.

• Make the process clear and easy to follow. Get tips on how to make an explainer page.
• Ensure that rewards have perceived value. Some examples include the following.
• Personalize rewards as much as possible. In fact, this was the single most desirable factor identified in one research study (by Wells Fargo. 77% surveyed consumers agreed).
• Allow customers to select their rewards whenever possible. This is why I personally like the idea of having a rewards catalog.
• Collaborate with other complementary brands to create rewards. Ensure collaborating brands share your core values and honor your target market's lifestyle. (Wells Fargo found that 70% of consumers agreed with this).
• Offer rewards that are exclusive.
• Remind customers of their total available rewards. Ideally, use email services that integrate with your points database to automatically insert the total points within the body of emails. 
• Reward customers for mentioning their redemption over social media. By rewarding evangelists, you also motivate them to resume the process of earning points.
• Conduct market research on your program to get customer feedback that can inform how you can improve your program.
• Recognize that, outside of your efforts, many other variables impact on the redemption rate. They may include industry, location, ease of redemption, program awareness, the perceived value of rewards and the age of your loyalty program. 

CONTENT RELATED TO MEASURING THE SUCCESS OF THE LOYALTY REWARDS PROGRAMS

• Why the old 'earn and burn' loyalty program model is failing and a new approach for modern consumers.
• Tiered loyalty programs
• Use spend-based loyalty rewards programs to give greater rewards to customers with the highest customer lifetime value (CLV) ... and reduce costs while you are at it. 
• A great loyalty rewards program can not help your business if customers can not understand it sufficiently well to sign up. Create a loyalty rewards program explainer page.
• Incorporate a referral program into your loyalty rewards program. These 2 types of program complement each other. While the loyalty rewards program seeks to retain customers, referral programs seek to acquire new customers.
• Analyze how well your rewards catalog has been curated.