Can rewards become the next currency?
By David Handlos, Founder of Europe’s leading mobile wallet company Stocard
The power of rewards is on the rise as both companies and consumers see their true value. The rise in popularity is owed to the benefits they present to everyone, and the ease in which they can now be applied. But do they have so much clout that they can be seen as a currency? David Handlos, Founder, Stocard looks at why loyalty programmes are worth their weight in gold.
Reward schemes are certainly nothing new. The first ones can be traced back to the 1950s when retailers used them as a tactic to get new customers in the door and to keep coming back. Today they’re viewed so popular that 59% of Brits think all organisations should offer them. And organisations are responding with 90% offering some form of loyalty scheme from Tesco to Barclays and everything in between. We are even starting to see them adopted by smaller companies and in the B2B world.
What’s in it for the consumer?
We all like that feeling that our money is working that bit harder for us and rewards offer the perfect way for this. In a way many of us have come to expect some form of a loyalty scheme when we engage with a company now. In fact, 78% of us would switch to another business based on their reward programme.
Why do they work for businesses?
Using rewards to change customer behaviour is a great tool. Now more than ever with the pandemic reshaping our habits, companies need to find ways to help incite change and to stay in touch with their consumers. They can for example take the issue of busy versus quiet times in a store. You can offer perks like ‘double points if you shop between 13.00-17.00 on weekdays’. This then helps get people in store time when it’s quiet and also eases pressure on busier periods.
Like in the 1950s many businesses today still want to attract new customers and then keep them coming back. Loyalty programmes are a great way to keep people coming back, the more customers spend with you the more perks they’re gaining.
It’s also a great way to get people to use several services you offer. For example, Boots’ advantage card can not only just be used to buy products in the store such as make up and vitamins but also in their opticians. 81% of customers say that being a member encourages them to spend more so it’s a proven way to increase revenue.
Data can create better profiles
Early on many companies and brands realised that loyalty schemes were a great way to get data on customer tracking purchases enabling organisations to create a more precise profile of individual customers.
Building these profiles becomes a powerful asset when it comes to create more personalised offers or adverts to customers. You can also better predict what times people engage with your business so you can schedule notifications to boost this.
Companies are now even using the schemes to build these profiles without relying on sales data. For example, John Lewis offers visitors the chance to win their ‘wish list’ up to £1000 a month. By getting users to create a wish list it shows the products that people are interested in but not purchasing. You can then use this to understand why, perhaps it’s down to price or colour choice and so on.
For us at Stocard, having insights on customer habits is hugely important as it helps us advise clients on what offers or rewards would work best for their audience. It also helps us identify cross company partnerships that may fit best based on the shopper’s profile.
It’s easier to implement
Thanks to advances in technology every business can now integrate reward schemes easily so even smaller companies can utilise them. Gone are the days when lengthy forms had to be filled out and plastic cards scanned – now it can all be managed through software.
Organisations can now use either their own app like Starbucks or work with established platforms such as Stocard to facilitate their loyalty programmes. This functionality offers more convenience to customers so they’re more likely to use the reward scheme.
The reward revolution?
So, as we can see both we and businesses love rewards, but is it time for a shake up? Well, 96% think so, saying companies need to seek new ways to reward consumers. It can’t just be points or a free product anymore, we all want something more sophisticated, special and impactful.
Take Vivid for example, it’s offering shares to customers as a way of rewarding customers. We expect to see more fintecs and financial institutions adopt more innovative ways to reward.
In addition, we can expect to see more responsible rewarding as the public becomes more aware of environmental and social issues. 61% said they would rather donate their rewards to a good cause than redeem them personally.
We can see this with the likes of the Co-Operative bank who allow customers to choose which charity will benefit from their rewards points. There are a number of benefactors to choose from Amnesty International to the Woodland Trust. Companies are recognising that being responsible is becoming increasingly important and are willing to help their audience do so.
The world of rewards is definitely growing and we can expect to see more innovation from all industries. With fintechs loyalty schemes offer a great way to gain new users and to keep them coming back. Whether it is valuable enough to become its own currency will depend on companies’ abilities to respond to what their customers want and need.
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