Why experiences trump discount codes when it comes to customer recognition

Fashion retailer Hawes & Curtis this year introduced a loyalty scheme together with a competition to win tickets for La Traviata at the Royal Opera House. It’s bang on trend. The brand has recently run other partnerships, including one with Best Loved Hotels, offering customers the chance to win gifts that reinforce the brands luxurypositioning.

People are more loyal to those brands that deliver an experienceAnastasia Roumelioti, Head of Marketing told Marketing Week.


Discounts are giving way to more meaningful experiences

Experiences are of growing importance to todays audience, especially millennials. As Amy Nield, Head of prize specialist, Protravel says, Brands are moving away from discounts towards more experiential offerings. From VIP events and cinema or theatre tickets, to city breaks and holidays, experiential rewards can make an emotional impact in a way that discounts or money off vouchers fail to do.

Of course, loyalty schemes are not a purely altruistic gesture on the brands part. It is about good business sense, as the wisdom below demonstrates

The cost of winning new customers

  • “Research shows that it can cost up to 30 times as much to get a new customer as it does to keep an existing one. It pays to stay very close to your customers, so you know their exact needs, today and tomorrow. Your aim is to be irreplaceable as their supplier.” The Chartered Institute of Marketing (CIM)
  • “Acquiring a customer costs five to 10 times more than retaining one.” (eMarketer)
  • “65% of a company’s business comes from existing customers, and it costs five times as much to attract a new customer than to keep an existing one satisfied.” (Gartner.)

Fostering loyalty pays off

While the exact figure might vary, the evidence that attracting a new customer is considerably more costly than retaining one is strong. And investing in customer loyalty beyond the basics of good service, good value and quality products, pays off.

As Nield says, People like to feel valued. In a global, online economy where consumers are just one click away from a competitor brand, companies need to invest in making their customers feel loved. If a reward is well thought through and tailored to the right audience, brands dont have to make a huge investment to reap the rewards.

In 1990, studies by Bain & Company, along with Earl Sasser of the Harvard Business School, showed that even a 5% increase in customer retention can lead to an increase in profits of between 25% and 95%.

The smartphone has changed the way people want to be rewarded

While loyalty programmes have endured in popularity, they have grown in sophistication. The majority are now digitally delivered, with customers able to collect, view and redeem their points on smartphones. Gone are the days of piles of paper vouchers stuffed in a wallet.

The experience has also evolved. No longer are loyalty rewards limited to straightforward transactions. Instead, brands integrate customer loyalty with experience and engagement.

Brands recognise social sharing

Take Nike Hong Kongs #Makeitcount campaign, which integrates the product into the loyalty programme. When customers complete missions in specific activities — such as running a certain distance or attending a particular number of dance classes — they are encouraged to share this on Facebook using the #Makeitcount hashtag. They are then rewarded with points which they can redeem for Nike products or tickets to sporting events, for example.

Nike is tapping into the human factor, incentivising, motivating and rewarding people for things they really care about; things which are personal to them. It creates an intimacy between brand and consumer.

customer recognition

Customer endorsements carry great weight – and experiences go viral

Social amplification of the sort encouraged by Nike is of growing importance to brands. Incentivising consumers to endorse a brands message with their peers on social media is of huge value. It is far more powerful than the brand itself broadcasting the same message. And travel and experiences have an even greater lifespan

As Nield says, Because travel and experiences are social by their very nature, people want to share them on social media, whether with updates, photos or tagging friends and family. It is the world we live in. Rewarding people with such experiences provides a great opportunity for brands to create something meaningful and memorable which will gain reach and power virally.

Eventbrite’s nationwide research of millennials, conducted by Harris, in 2014, shows that this generation highly values experiences, and is increasingly spending time and money on them: from concerts and social events to athletic pursuits, to cultural experiences. For this group, happiness isn’t as focused on possessions or career status. Living a meaningful, happy life is about creating, sharing and capturing memories earned through experiences that span the spectrum of life’s opportunities.

The need to share is strong

The appetite for social sharing has been accelerated by the ease with which people can take photos and share experiences on smartphones. Consider this:

It means that not only do brands who reward consumers with travel and experiences fuel a warm and fuzzy feeling with the consumer; those consumers go on to share their joy with both peers and the world at large. The positive message is spread far and wide.

Recognising customersgood deeds is also on the rise

But its not just about rewarding loyalty. There is a growing number of brands looking to reward the good behaviour of consumers — with everything from clotted cream to cake

Last year, Asda ran its #cakemyday campaign to mark its 50th anniversary. The initiative tapped into the power of social media, encouraging people to share Facebook messages about friends or family members who they felt were deserving of a treat.

The supermarkets #cakemyday camper van toured the country, delivering cake to unsuspecting members of the public who had been nominated by well meaning friends. It also donated cheques to good causes. The feel goodfactor was self perpetuating, with both Asda and the recipients themselves sharing photos and messages of thanks.

Fast fact

In total the Asda Foundation donated £501,326 to 72 local charities and good causes during the #cakemyday tour.

As Nield says, The opportunities to create a thank youthat not only rewards the consumer but reflects a brands own values are almost limitless. Whether it is in the form of the brands core product, or in providing an experience related to that product, it can really help a company to stand out from the crowd.

customer recognition reward

Roddas is the cream of the community

Cornish clotted cream company, Roddas has also chosen to reward consumers for doing good. Its brand is rooted in a strong community spirit, and it appeals to shoppers to tell it about good causes they are involved with.  

In response, the company rewards ten good deeds each month, providing clotted cream to crown the recipientscream teas. To date it has donated cream to a number of causes including the Devon Air Ambulance Trust, Little Paxton Village Church and Calverton Ladies RNLI.

Nield believes there is scope to expand on this initiative. Roddas could take this one step further and lay on cream teas in memorable places, such as on a beach, at the top of a skyscraper or even on the train! Building a bespoke experience will really live on in the memory and have huge impact, not to mention creating valuable social currency.

From The Body Shop to M&S, cause marketing is powerful

Other brands have taken a combined approach, giving consumers the option to donate their reward to charity.

The Body Shops Love Your Body Club, a loyalty programme launched last year, rewards customers with £5 for every £50 spent in store, but gives customers the option to donate their points to charity. This way, the brand gets to shout about its commitment to the greater good while also putting the responsibility in its consumershands.

Marks & Spencers Sparksloyalty scheme, which launched last year, also has a charitable thread. The retailer allows customers to choose one of several charities online. Each time they use their cards a penny is donated to that organisation. M&S is helping its consumers to do their bit, while simultaneously showcasing its own altruism.

Fast fact

In just eight months, Marks & Spencer customers generated £1 million for charity by using the company’s Sparks loyalty card.

As Nield comments, There is strong consumer demand for brands to show their commitment to the wider community and to demonstrate their ethics and social awareness. Initiatives which combine loyalty with cause marketing can work really well, while building in an experience — such as a day out or event — can really bring this to life.

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