The secret behind creating an effective customer incentive program
When they work, customer incentive programs are like piecing together a puzzle. Good customer service is a key part of this helping to retain loyal customers. In the current consumer landscape, it's important for companies interested in driving up acquisition and retention rates to go the extra mile in ensuring an exemplary customer experience. If you have the right market research and pair it with a commitment to recognizing the value each client brings to the table, you can create brand awareness and customer behavior that spurs growth.
Increasing numbers of organizations are accomplishing this through personalized and value-adding touchpoints throughout the customer journey and few things achieve this better than gift cards. Customer incentives like these make it more likely that buyers will not only stick to your service but also sing your praises to other potential customers. These customer incentives can create a virtuous circle of recruitment and retention for new and happy customers.
What are customer incentives?
Customer incentives use value-added items you provide to your new or existing customer base, such as a monetary incentive, tangible benefit, or increasingly, virtual incentives, in return for desirable purchasing or referral behaviors. These incentives, when properly marketed or employed, can have an immediate and significant topline impact. The right customer rewards program can also lower customer acquisition costs in the long run through better reach and reputational metrics.
Benefits of offering incentives to customers
Just as with employee incentive programs, there are enduring benefits to providing incentives and extra value in the customer relationship:
Longer retention: The simple truth is that happy customers stick around. Companies that offer customer incentives to reward customer loyalty often see longer service terms and better brand loyalty than those that don't.
Better reach: Satisfied customers are always excited to refer a favorite brand to family and friends. Encouraging this consumer preference by investing in customer reward programs also increases your potential for new customer acquisition by rewarding customers who refer your brand with very low acquisition costs as compared to cold acquisition through traditional marketing channels.
More brand loyalty: Buyers who enjoy a great customer experience tend not to stray. These value-added experiences improve brand loyalty by giving your customers tangible reasons and benefits for sticking with you. When compared to money, gift cards are also the more memorable and meaningful choice over straight monetary incentives.
Higher customer value: Incentivizing consumers through solid customer rewards programs often results in higher per-customer spending. Customers see the value in getting increased benefits at higher service tiers and purchase more with a trusted brand. This can dramatically increase your average transaction value or monthly recurring value.
Types of consumer incentives to offer and consumer incentive examples
Incentives for rewarding customer and client loyalty can range from small tokens of appreciation like a coffee gift card, to larger loyalty points based on criteria such as account value, number of referred customers, service tier, or time of service. This isn't just something for large financial services, as even small businesses or companies just getting into customer incentives can easily offer an effective loyalty program at any budget.
The true impact of these is in offering creative marketing incentives and personalized experience that drives engagement and fosters more positive brand sentiment. Here are a few highly successful consumer incentives companies are using for their new and existing customer loyalty programs:
- Bonus prepaid cards
- Give-and-get referral bonuses
- Points-based loyalty program
- Years of service rewards
- Win-back offers
- Make-good and rebates
- Thank you notes with gift cards
- Upgrade and tier-level rewards
Creating an effective customer incentive program
Whether you’re building a program for employee incentives or customer recognition, creating a winning incentive program relies on giving the right rewards to the right people at the right time. A rewards program doesn’t need to be elaborate, but it should aim be easily repeatable, scalable, and customizable. Here are some key ways to ensure your customer incentive program hits the mark without breaking the bank or burning out your staff:
Recognize customers at every service level: Incentives are not a one-and-done method of increasing brand loyalty. The best brands make continual efforts to engage with their customer base throughout their brand journey. Recognizing both new and long-term customers, as well as those who engage with your business at different levels is essential to ensuring your customers feel valued and seen.
Personalize the experience: Personalization is easily the most important aspect of any gift, marketing, or customer retention program. Customers are increasingly aware of mass-marketed incentive offers, so cutting through the noise requires a deep level of insight and a commitment to creating individual experiences at scale. Using customer information and automation together, you can administer a personalized experience for hundreds or thousands of customers simultaneously. Choice and flexibility in what types of experiences and incentives are another reason why gift cards can be such a powerful choice - Specially when you can give the recipient the choice to get what they actually want.
Make rewards accessible: For rewards to be enticing, they have to be easy to access and use. Many organizations choose gift cards for their new customer and existing customer rewards programs since they create instant gratification for recipients. Using digital rewards and virtual incentives greatly improves your program results by giving customers more of what they want, with less effort.
Reduce administrative burden: Effective customer incentives also rely on maintaining high ROI within the program. Programs that are hard to administer, expensive, or lack visibility greatly reduce the return on investment. Using a streamlined platform is recommended for administering customer incentive programs at scale. Not only does it take the manual labor out of administration, but it also centralizes and contextualizes your data for better decision-making on future programs.
5 metrics to measure your customer incentive program
There are dozens of available metrics with which to measure your customer loyalty program and the success of your programs and product offerings. While every metric can be valuable in the right context, here are five top customer loyalty success metrics that offer a clear picture of the customer experience and the long-term stability of your business:
Lifetime Customer Value (LCV): This is the average of your total dollars spent per customer across all transactions. Both account longevity and average transaction value (ATV) contribute to the health of LCV metrics. High LCV indicates that you are providing satisfactory service and product experience and indicates healthy brand value.
Monthly Recurring Revenue (MRR): The total amount of revenue you can reliably expect from recurring purchases or subscriptions within a given month. High MRR signals that you offer a satisfactory service that customers are willing to continue using over time. Problems with MRR may point to issues with either customer service or product lifecycle.
Customer Satisfaction (CSAT): Customer satisfaction is a direct metric, usually derived from a post-activity satisfaction survey. Customers are asked to rate their experience according to a standard scale (For instance, zero to five stars, or a scale from 1-10). It may also ask category-related or clarifying open-ended questions. A great way to encourage response rates for these valuable surveys is to offer survey incentives for customers willing to answer a few questions.
Net Promoter Score (NPS): This is a reputational metric that quantifies customer experience and brand ambassador strength on a scale of 1 to 10. It generalizes customers into three categories:
- Promoters: Brand superfans that are likely to continue using your products and have a good incentive to refer your business to others.
- Passives: Consumers who enjoy your products but do not evangelize the brand, are potentially at risk of migrating to competitors.
- Detractors: Unhappy customers whose dissatisfaction may result in negative reviews or poor user ratings.
Churn Rate: This measures the cancellation rates for customers over a set period. High customer churn can point to several issues, including poor customer service experience, lack of education during the customer lifecycle, or poor performance against competitor offerings.
Low numbers on any of the above metrics should be diagnosed and addressed to ensure customers are having the best experience. In cases of low scores, customer incentives such as win-back offers and tangible tokens of appreciation may help mend fences with unsatisfied buyers and improve customer success metrics.
How to power your customer incentive programs with Runa
Building an effective customer incentive program requires a powerful management platform. Segmentation and automation are important for small businesses and especially for high-growth companies looking to effectively scale.
The top benefits of using gift card-based programs are - ease of delivery, personalization, lower cost, increase in customer satisfaction, and campaign flexibility.
Fortunately, with Runa you can manage all your customer incentive programs from one centralized platform, and get access to data including:
- Profitable customer and repeat customer data
- Reward categories and brands chosen
- Time to open and/or purchase completion
- Purchase amounts and remaining balances
- Demographic data on card selection and redemption data
- Overall ROI for campaigns cut across any number of metrics
- Customer service data (like win-back and resolution success rates)
Scaling your customer incentive programs with Runa gives you full flexibility to develop any number of effective incentives and rewards for your best customers.
Is your customer incentive program ready to scale to the next level? Click here to schedule a demo of the Runa platform.