In today's value exchange economy, consumers constantly seek their favorite brands' best products, experiences, and personalization. To build strong and lasting connections, brands must reward customers for their purchases and loyalty. Rewards incentivize consumers and provide brands with valuable data to create personalized shopping experiences. In this article, we will explore the benefits of consumer rewards, how they influence purchase decisions, and their role in increasing customer loyalty and advocacy.

Consumer behavior studies have consistently shown that rewards impact purchases. A staggering 92% of consumers state that rewards influence purchases. 79% of consumers are more likely to continue purchasing from brands that offer rewards and loyalty programs. The sales funnel illustrates this journey, starting with awareness, acquisition, purchase, and advocacy.

Benefits

When brands implement rewards programs, they reap numerous benefits. First and foremost, rewards programs increase customer lifetime value, decrease customer acquisition costs, and provide a better return on investment over time. Moreover, rewards programs encourage consumers to talk about your brand, expanding your reach and enhancing your reputation. This, in turn, creates a dedicated community of consumers who make repeat purchases and attract new customers.

For consumers, rewards offer various benefits as well. They help individuals save money on actions they were planning to complete, such as subscribing to a newsletter or purchasing. Rewards also provide opportunities for consumers to discover new products and experiences they might not have considered otherwise. Most importantly, rewards make customers feel appreciated, fostering stronger relationships and better communication with their favorite brands.

Challenges & Solutions

One of the significant challenges that brands face when launching ongoing rewards programs is allocating a sufficient budget for rewards. While offering tangible products and merchandise as rewards may seem enticing, it can quickly become expensive due to the costs associated with production, shipping, and handling. Similarly, although popular with consumers, gift cards can strain a brand's budget. Coupons may only sometimes yield the desired consumer response.

However, some cost-effective alternatives can still provide value to consumers while being manageable for brands. One such approach is rewarding consumers with sweepstakes entries, spin-and-win games, and instant-win games. These methods allow brands to offer engaging experiences without physical rewards. By combining these gamified elements with well-designed game mechanics that provide points for specific behaviors, brands can create a winning formula for consumer engagement.

Moreover, implementing game theory strategies like scarcity modeling, surprise and delights, and accelerators can further enhance the effectiveness of rewards programs. Scarcity modeling creates a sense of urgency and exclusivity, compelling consumers to take action before a reward opportunity expires. Surprise and delights add an element of unexpected rewards, pleasantly surprising consumers and fostering a positive brand perception. Accelerators, such as bonus points or tiered rewards, incentivize consumers to reach certain milestones or engage in specific behaviors to unlock greater benefits.

By leveraging these strategies and approaches, brands can overcome the challenges associated with funding rewards budgets and create compelling rewards programs that are both cost-effective and engaging for consumers. Brands need to strike a balance between offering meaningful rewards and managing their budget, ultimately creating a mutually beneficial program for both the brand and its loyal customers.

Types of Rewards

Consumer rewards programs can offer various enticing rewards to engage and motivate customers. These programs understand the importance of providing diverse incentives to cater to consumers' preferences and interests. The following list highlights some popular types of rewards commonly found in consumer rewards programs.

1. Discounts & Coupons

Discounts on future purchases or coupons for discounted products are a staple in rewards programs. They provide immediate value to consumers and encourage repeat purchases.

For example, 3 tier logic established a consumer rewards program for the animal nutrition line of an American global food corporation with products and services in agriculture, beauty, food & beverage industries. Participating consumers can redeem their points for coupons from $2-$50 off certain products.

2. Cashback Rebates

Cashback rewards allow customers to earn a percentage of their purchase amount back as a monetary reward. This provides tangible savings and motivates customers to continue shopping with the brand.

Reyes Coca-Cola Bottling Company launched a program to help promote sales of Smartwater, rewarding consumers who purchase a participating Smartwater product from participating locations with a $1 PayPal or Venmo reward. Customers could validate their purchase by registering to the promotion site and uploading a picture of their receipt. Once their purchase has been validated, customers receive an email with their $1 PayPal or Venmo reward and instructions on redeeming it.

3. Gift Cards

Gift cards are a versatile and popular choice among consumers. They offer flexibility in choosing the desired product or service, often seen as a valuable reward.

TENA®, one of North America’s leading brands of personal hygiene products for adults with incontinence, partnered with 3 tier logic to build a successful consumer rewards program in which participating consumers can earn points for uploading and validating receipts, watching educational videos about TENA® products, reading informative articles, sharing content on Facebook, or filling out a survey.

The points they earn by participating in the program can be redeemed for digital gift cards. Rewards are tiered by the number of points redeemed: 4,000 points can be redeemed for a $5 card, 8,000 points for a $10 card, and so on.

4. Free Products or Samples

Allowing customers to try new products or receive free samples is an effective way to introduce them to different offerings. This type of reward encourages trial and can lead to future purchases.

Universal Pictures is an American film production and distribution company owned by Comcast through its subsidiary, NBCUniversal. They partnered with 3 tier logic to launch a consumer rewards program in 2020 to increase sales and gain in-depth purchasing insights. Once consumers in the program have validated their movie purchases through an online code or Movies Anywhere purchase, they are rewarded with points. Every new release is worth 1,000 points, every classic movie is worth 500 points, and every movie ticket is worth 200 points (two tickets maximum per eligible movie). These points can be redeemed for free products such as movies, desktop or mobile wallpapers, printable activity sheets, or conference backgrounds.

5. Exclusive Access

VIP access to special events, private sales, or early product releases creates a sense of exclusivity and enhances the customer experience. Consumers value being among the first to try or access something unique.

Leap Vapor is a consumer device company owned by E-Alternative Solutions, a sister company of Swisher, that produces and sells e-cigarette products, including disposable and rechargeable e-cigarettes, cartridges, and accessories. Consumers earn points by uploading codes found in the packaging of Leap products.

The program functions with a tiered points system, allowing consumers to move up tiers as they purchase products and earn points. For example, Genius Members earn three free spin-and-win entries per month, 2x the chance of winning when entering sweepstakes or giveaways, the option to customize their program profile, VIP customer support and 10 extra points on top of any points earned on Leap Smart Rewards.

6. Travel & Experiences

Rewards offering travel perks, such as discounted flights or hotel stays, or memorable experiences like spa treatments, concert tickets, or adventure activities, can create unforgettable customer moments.

Tyson Foods, Inc. is an American multinational corporation and the world's second-largest processor and marketer of chicken, beef, and pork. They partnered with 3 tier logic to launch their national ‘Big Game SMS Sweepstakes’ promotion. When consumers purchased a qualifying Tyson Foods product from participating retailers, they could receive a sweepstakes entry to win a trip for two to Super Bowl LII or 1 of 12 secondary prizes of $50 digital Visa cards.

7. Charitable Donations

Some rewards programs allow customers to donate their rewards to charitable causes, giving them a sense of purpose and the opportunity to contribute to a greater good. This can align with other brand activism initiatives that brands may be implementing, such as operational changes, or external initiatives such as partnering with nonprofit organizations or collaborating with activist groups.

The consumer rewards program for the animal nutrition line of an American global food corporation with products and services in agriculture, beauty, food & beverage industries allows consumers to earn points by uploading receipts, watching educational videos, reading industry-related articles, referring friends, or taking quizzes and surveys. Participating consumers can redeem their points for donations ranging from $2-$10 towards life-changing animal organizations, allowing consumers to engage with the brand in a meaningful way.

8. Tiered Rewards

Tiered systems offer escalating rewards as customers progress through different levels based on their loyalty or spending. This creates a sense of achievement and encourages customers to continue engaging with the brand.

Leap Vapor’s Leap Smart Rewards Program functions with a tiered points system, allowing consumers to move up tiers as they purchase products and earn points.

Smart Rewards Members earn 10 extra points when uploading their first Leap product code.
Talented Members earn one free spin-and-win entry per month.
Gifted Members earn two free spin-and-win entries per month and 5 extra points on top of any points earned on Leap Smart Rewards.
Genius Members earn three free spin-and-win entries per month, 2x the chance of winning when entering sweepstakes or giveaways, the option to customize their program profile, VIP customer support and 10 extra points on top of any points earned on Leap Smart Rewards.

The tiered points system incentivizes new customers to become loyal and current loyal customers to stay engaged with the program.

9. Personalized Offers

Tailored offers based on individual preferences and purchase history show customers that their loyalty is recognized and appreciated. These personalized rewards can range from customized product recommendations to exclusive discounts.

Universal Pictures also partnered with 3 tier logic by using PLATFORM³’s Dynamic Messaging module to engage with users through personalized pop-ups. For example, customers who only need certain points to reach the next tier receive a pop-up encouraging them to take action, or users who haven’t engaged with a spin-and-win will be prompted to check it out.

10. Gamified Rewards

Gamification elements such as spin-and-win games, challenges, or points-based systems can make the rewards program more interactive and enjoyable. Customers can earn points or compete for prizes, adding an element of excitement to their shopping experience.’

The Toro Company is a leading worldwide provider of innovative solutions for the outdoor environment. This spring, the brand is utilizing the Contests & Promotions module of PLATFORM³ to execute a spin-and-win sweepstakes. As part of an internal sales promotion, contractors awarded one of the 500 codes can enter a single sweepstake on The One Landscape Contractor Rewards Program.

The sweepstakes offer a variety of enticing prizes, such as a $1,000 Ticketmaster gift card, a $500 Apple iPad Air, a $500 Expedia gift card, Beats Fit Pro headphones, a soundbar, a $200 Visa gift card, and program points ranging from 500 to 2,500 points.

These are just a few examples of the diverse rewards available in consumer rewards programs. By offering a variety of incentives, brands can cater to different customer preferences and increase engagement, loyalty, and advocacy among their customer base.

Path to Purchase

The power of rewards extends beyond driving purchases; it can be leveraged throughout the consumer journey. In the awareness and acquisition stages, brands can use rewards to capture consumers' attention, maintain top-of-mind awareness, and encourage engagement. Contest marketing is an effective strategy to initiate relationships, allowing brands to run contests, sweepstakes, or giveaways that allow consumers to win attractive prizes. Consumers provide their contact information by participating, allowing brands to nurture them further with targeted promotions.

In the purchase stage, rewards are crucial in driving product purchasing, highlighting competitive advantages, and boosting sales and return on investment. Gift-with-purchase programs, for example, incentivize consumers to make initial purchases by offering additional rewards based on specific purchase criteria. As consumers continue to make purchases, loyalty and referral programs become more relevant, offering even better rewards to cultivate loyalty and advocacy.

In the loyalty and advocacy stages, rewards programs generate continuous user engagement, build a community of dedicated consumers, and encourage brand advocacy. By incorporating objectives, actions, and rewards, loyalty programs provide a personalized experience for consumers. They can engage in various actions, such as making purchases, leaving reviews, or completing surveys, to earn rewards tailored to their preferences. This strengthens the bond between consumers and brands and allows marketers to capture valuable data for continuous improvement.

To ensure the effectiveness of rewards programs, brands should leverage first-party data to personalize consumer rewards. By utilizing progressive profiling, brands can gather crucial information about their customers, such as purchase history, preferences, and demographics. This data enables brands to segment their audience and deliver highly personalized rewards, enhancing the overall customer experience.

Consumer rewards drive purchase decisions, increase loyalty, and foster brand advocacy. Brands that implement rewards programs benefit from increased customer lifetime value, reduced acquisition costs, and improved return on investment. For consumers, rewards offer tangible benefits, such as saving money, discovering new products, and feeling appreciated by their favorite brands. By strategically leveraging rewards across the consumer journey and personalizing them using first-party data, brands can establish deeper relationships with their customers and incentivize them to engage with their brand at every touchpoint.

Bring customers along the path to purchase with consumer rewards

In conclusion, reward programs can be an effective tool for brands to increase customer loyalty and drive sales. By understanding their customers' needs and preferences and creating a program that aligns with them, brands can create a positive experience for their customers and keep them coming back. Additionally, with the help of technology and data analytics, brands can personalize their reward programs and make them more effective.

However, it's important to note that reward programs are not a one-size-fits-all solution. Brands should evaluate their business goals and customer base before implementing a reward program to ensure it's the right fit. Moreover, brands should continuously monitor and optimize their reward program to ensure it meets the desired results. When done right, reward programs can be a valuable asset for brands in driving customer loyalty and improving their bottom line.

3 tier logic’s PLATFORM³ helps brands create consumer reward programs to drive customer loyalty and capture valuable first-party data. Our diverse team of experts can help you build a strategy that makes a lasting impact on your promotion, contest, or loyalty program. Modules like Rewards, Dynamic Messaging, and Data Capture & Analytics give marketers the tools to strengthen their connections with customers and make informed business decisions. To learn more, book a demo with our team today.

The Power of Consumer Rewards: Driving Purchase, Loyalty, and Advocacy