How to do loyalty and rewards without discounts

Nurturing customer loyalty means working consistently to find a higher share of shoppers’ hearts and minds — conveying value by building deeper emotional connections.

According to loyalty expert Philip Shelper of Loyalty & Reward Co, strong connections between a brand and its loyal customers are reflected in increased visits, spend, brand affinity, advocacy, retention, and market share. 

Smart and timely discounts are a means of conveying value to customers. However, seeing a loyalty program as a tool to offer discounted offers to members would be killing its capabilities of incentivizing long-term, meaningful, and win-win engagement. 

On top of that, by relying too heavily on discounts you risk being seen as a business that offers their loyal customers no other value than lower prices and cheapening your brand image. 

The major driver of engagement with most loyalty and reward schemes is value. Customers join a loyalty program and continue their membership because it allows them to access value—exclusive rewards that non-members miss. 

In this post, we’ll talk about how you can benefit from rewards effectively to develop customer loyalty — without having to overuse discounts.

Experiential rewards are great solutions to provide loyal customers with unique experiences that are not only valuable but also memorable. These non-monetary incentives emphasize the exclusive experience of engagement with a brand rather than discounted offers. 

Experiential rewards allow loyal customers to indulge themselves in activities that they may not have been able to experience otherwise. For example, Sephora’s loyalty program, Beauty Insider, allows customers to join a number of exclusive communities and events including:

Other examples of experiential rewards include early booking or priority access to new product lines, which can often prove more effective than point-driven discounts. 

Uber Rewards program is a four-tiered loyalty scheme (Blue, Gold, Platinum, and Diamond) to reward Uber drivers. The benefits of joining the program include:

As the image shows, when members move to higher tiers they benefit from more exclusive experiential rewards, meaning such incentives play a key role in retaining a business’ most valued customers.  

Successful loyalty programs move beyond discounts and coupons, allowing members to participate in activities that contribute to social causes. In terms of customer engagement, these initiatives move the needle because members find their accumulated points as a currency enabling them to make a positive difference. 

Some of the effective loyalty programs that tie their rewards to social causes include:

A holistic customer experience is defined as “a multidimensional concept that involves the customer’s cognitive, affective, emotional, social, and physical responses to the retailer.” Achieving a holistic CX requires a comprehensive reward ecosystem, an approach that enables you to offer the right rewards to the right customers at the right time. To make this ecosystem even more holistic, you can partner with other businesses, rewarding customers’ actions with the products and services of your partners. 

For instance, successful loyalty programs choose to offer partners gift cards instead of discounts. To activate this functionality, you can use Talon.One's giveaway feature, creating a pool of single-use codes (for example, $30 Amazon gift cards) and then a condition and effect indicating that for every eligible transaction (say worth $300 or more) the customer will receive one gift card. 

If you focus too narrowly on purely monetary rewards, you risk becoming redundant when that decision support is pulled away. Instead, successful businesses look for ways to ensure their experiential rewards are tailored to a customer’s actual interests.

Personalized experiences help businesses gain a sustainable competitive advantage. The ideal form of personalization is to make the customer part of the dialogue and leverage zero-party data to create one-to-one experiences. 

Dior’s four-tiered loyalty program offers members in the highest tier (Platinum) a number of personalized rewards including:

As transactional rewards like discounts can’t ensure that you get your customers to stick to new behavior, you must find a way to make it fun, exciting, or emotionally valuable. 

This is exactly how gamification works. When implemented well, a gamified experience motivates customers to accept fun challenges to receive rewards, resulting in a stronger emotional bond with the business. Gamification also boosts the redemption rate of rewards because customers actually work to achieve them. 

Loyalty technology has empowered brands to add complex gamified elements to the shopping journey. However, gamification doesn’t have to be complex to work wonders for customer experience. The tech-based coffee chain, Flash Coffee, worked with Talon.One to gamify their loyalty program. With a spin-to-win functionality, they encouraged members to log in and play a mini-game with the chance of winning unique prizes. 

You don’t need to remove discounts from your promotional features altogether. You just need to offer them in a smart and effective way:

When implemented well, discounts can be effective tools to engage with customers. However, relying too heavily on these transactional incentives risks being abandoned when competitors offer higher discounts. To do loyalty and rewards without discounts, you can: