Authored by Andy Hermo, Chief Industrial Officer at iSeatz, a loyalty expertise firm.
Bonus incomes on particular on a regular basis spending classes – suppose fuel and groceries – have lengthy been a pillar of bank card loyalty methods. However the redemption aspect of that equation has historically been targeted on both cash-back or extra inspirational rewards, like journey. The result’s an extended interval between incomes and redeeming that limits members’ engagement with their loyalty applications.
Providing a extra complete number of life-style rewards can assist loyalty applications enhance engagement and revel in a number of different key advantages. One of many chief benefits of sustaining a sturdy portfolio of life-style rewards is differentiating a loyalty program from the various opponents that provide simply the point-redemption fundamentals. Life-style rewards, sometimes smaller dollar-amount merchandise in comparison with airfares or lodge stays, could be redeemed extra continuously, lowering the time between incomes and redemption and driving extra loyalty program interactions.
Extra interactions imply extra alternatives for a loyalty program to study its members, producing useful first-party shopper knowledge and fueling personalization methods. And life-style rewards may also be deployed to enhance increased worth rewards, making a extra cohesive expertise for program members and forging a stronger bond between model and buyer that will increase general lifetime worth.
Breaking away from the standard loyalty program pack
Life-style rewards are a chance for differentiation as a result of so many loyalty applications haven’t but embraced them to their fullest extent. In accordance with the iSeatz State of Loyalty: 2022 Bank card rewards Report launched earlier this yr, solely a tiny fraction of the most important bank card issuers with loyalty applications supply what could possibly be thought-about a sturdy life-style rewards portfolio. Solely a 3rd present cardholders with redemption alternatives for dwell occasions, lower than 15% supply direct choices for redeeming factors for eating or meals supply, and just one makes carbon offsets a redeemable reward.
Examine this to the truth that all the analyzed applications supply flight redemption alternatives, 96% embody lodge and automotive rental, and 77% present cruise rewards.
Why don’t extra loyalty applications incorporate life-style rewards into their redemption combine?
Some would possibly view these smaller-ticket services and products as missing the income “bang” for the bucks they might outlay to supply them. Nonetheless, that overlooks life-style rewards’ potential to drive incremental spending. Others would possibly see sure life-style rewards as diluting their model, although they are often curated to go well with any model’s picture, values and viewers.
Regardless of the reasoning, as many loyalty applications hesitate to deploy life-style rewards in a complete method, there’s a chance for different applications to set themselves aside by embracing them wholeheartedly.
Extra touchpoints, extra buyer knowledge, extra engaged members
At a time when many consumer-facing manufacturers are determined for first-party buyer knowledge, life-style rewards create a pathway for buying this useful perception into member preferences and patterns. Further redemption choices create different touchpoints, producing first-party knowledge that can be utilized to create customized choices and member communications to spur much more program interactions. It’s a virtuous cycle that may scale back the price of member and buyer acquisition, enhance redemption charges and enhance spending on a model’s core merchandise.
With entry to knowledge that may assist personalization methods, loyalty applications can create a extra related, related expertise for members. Life-style rewards can play a big position on this course of as properly. Pairing a redemption supply for meals supply service with a suggestion for a trip rental property to a member that has already proven curiosity in that type of journey demonstrates an understanding of their wants–and helps endear the model to that buyer. However the energy of personalization can solely be unleashed when a loyalty program has the info to gasoline it.
Life-style rewards result in improved lifetime worth
Complementary choices don’t simply influence model affinity; in addition they generate incremental income and enhance buyer and member lifetime worth. Life-style rewards create cross-sell alternatives and maintain members participating with the loyalty applications once they would possibly in any other case enterprise outdoors of the ecosystem to search out further services or products.
When a loyalty program can supply a member every part they want for a visit through factors redemption or buy – not simply core journey merchandise however the supplementary services and products that actually spherical out a trip – they enhance their possession of that buyer’s journey journey. When this extends to non-travel, at-home engagement, that’s when a model has created the stickiness that results in leaps in buyer lifetime worth.
That is maybe the largest long-term advantage of life-style rewards and why lots of the main new loyalty program platforms launching quickly will characteristic extra of them. Life-style rewards can considerably increase what a loyalty program could be to a member. They evolve the model relationship past the transactional or situational into the on a regular basis and in a extra tangible method than money again or points-per-gallon reductions would possibly.
Whereas journey loyalty applications commit important sources to turning into a member’s first thought when contemplating journey, life-style rewards assist them keep high of thoughts. With the differentiation benefit, their potential to generate useful member knowledge via further touchpoints, and their capability to create extra cohesive, complementary redemption experiences, life-style rewards could be important to a profitable, future-proof loyalty technique.