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10 Ways to Liven Up Your Loyalty Program
Add functionality and flair to traditional rewards-based structures
For the rest of the May 2015 issue of CRM magazine please click here
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Whether they're hanging on your keychain or waiting for you in your mobile wallet, there’s a good chance most of your loyalty cards haven't been put to good use in months. As of 2014, there were more than 3 billion loyalty program memberships in the United States—that's an average of 29 programs per household, according to loyalty marketing research firm Colloquy. Though 83 percent of consumers say they belong to at least one loyalty program, 58 percent say they don't actively participate in most of their memberships. In fact, most individual consumers use about six on a regular basis.

It's no secret that consumer expectations have grown in nearly every aspect of business, and loyalty programs have not been immune to this trend. Incentivized programs that reward consumers with points, miles, discounts, and cash-back offers are the most popular, but with dwindling engagement rates, even these have gone stale. Still, reinvigorating them is not impossible, experts agree. Give new life to a tried-and-true approach with these 10 tips.

1. DON'T UNDERESTIMATE THE ELEMENT OF SURPRISE

The rewards that customers earn through traditional loyalty programs are extrinsic, meaning they are tangible and received for accomplishing something. "Earning free food, getting cash back, or even receiving coupons and discounts all represent extrinsic rewards, because they have physical value in the real world," Ben Parr, venture capitalist and author of Captivology: The Science of Capturing People's Attention, says. Though these kinds of rewards can be effective at motivating consumers, Parr says intrinsic rewards, or those that activate emotions of happiness and satisfaction, are typically more powerful.

To leverage the potential of both, brands should inject drivers of intrinsic rewards into existing programs. For example, offering surprise rewards in addition to or instead of earned rewards can boost engagement significantly. "People love [being] surprised. Surprises stimulate those feelings of excitement and happiness that are linked to intrinsic rewards, and the chemistry of those feelings makes customers more loyal and more engaged with the loyalty program and the brand," Parr says. There's also the added mystery of not knowing when the next reward will come, which keeps customers coming back.

2. ENABLE AND ENCOURAGE SOCIAL SHARING

Today's consumers are social—they want to stay connected to friends and family across all of their online and offline experiences, and loyalty programs that enable them to share rewards are becoming increasingly successful. But points sharing isn't just a practical solution for consumers; brands benefit as well. "Giving points away is another way to trigger a feeling of intrinsic reward. Just like we loved having someone share our crayons with us in kindergarten, we love having people share rewards with us. As humans, we crave those interpersonal interactions that make us feel connected to others, and we'll keep coming back for them again and again. When we come back," Parr says, "brands win."

A company called Points is among the pioneers of reward-sharing solutions, and works with a number of major airlines, hotel chains, and retailers to facilitate their rewards platforms. "Point transferability was the foundation of our company, because that social component is so important to consumers. It's rewarding for people to be able to share their hard-earned points or miles, and once they've earned them, they're theirs. They should be able to do whatever they want with them," Points president Christopher Barnard says. Companies such as United Airlines and Hilton Worldwide use the Points platform to allow point transfers on their Web sites.

Mobile game developers have zeroed in on this phenomenon, too, and have integrated reward-sharing pathways into their apps. Popular games such as Farmville and Candy Crush, for example, encourage players to ask Facebook friends for "lives" or other game perks. In fact, it's one of the few ways that players can avoid paying in order to move ahead in the game. "By allowing players to give away or obtain lives from their friends, you're giving them autonomy, which creates a more positive experience than having them pay to progress in the game. Ultimately, the brand behind the game benefits anyway," Parr says, "because the players keep playing."

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