#535: Attainable Rewards Leads to Retainable Customers

This week’s “Wiser Loyalty” podcast episode has senior faculty members of the Loyalty Academy™, Bill Hanifin and Aaron Dauphinee back together again. This is week two of May that explores constructs taken from the Loyalty Academy™ curriculum for the Loyalty Rewards Strategies & Redemption Experience course (course #108).

In this episode, Bill and Aaron focus in on the importance of attainable rewards, both from the strategy and redemption experience perspective.  The two offer a set of real world examples to help reinforce some of the successes and poorer decisions select brands have made when it comes to rewarding the program members.

In the Wiser Loyalty series, Bill and Aaron draw a theme each month based on the courses required to earn the Certified Loyalty Marketing Professional™ (CLMP™) designation which is nearing on 1,000 individuals across 53 countries worldwide.

Show Notes:

1) ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Aaron Dauphinee⁠⁠⁠⁠

2) ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Bill Hanifin⁠⁠⁠⁠

3)  ⁠⁠⁠⁠⁠⁠⁠The Wise Marketer 

Audio Transcript

Paula: Welcome to Let’s Talk Loyalty, an industry podcast for loyalty marketing professionals. I’m Paula Thomas, the founder and CEO of Let’s Talk Loyalty and also Loyalty TV. If you work in loyalty marketing, you can watch our video interviews every Thursday on www. loyalty. tv. And of course you can listen to our podcasts every Tuesday, every Wednesday, and every Thursday to learn the latest ideas from loyalty experts.

experts around the world. Today’s episode is part of The Wiser Loyalty Series, which is hosted by our partners, The Wise Marketer Group. The Wise Marketer Group is a media education and advisory services company providing resources for loyalty marketeers through the Wise Marketer digital publication and The Loyalty Academy program that offers the certified loyalty marketing professional or CLMP designation. I hope you enjoy this weekly podcast, The Wiser Loyalty Series, brought to you by Let’s Talk Loyalty and The Wise Marketer Group. Just before we share today’s episode, I want to ask you to sign up to the Let’s Talk Loyalty email newsletter. Our email newsletter is by far the best way for us to keep you up to date with all of the latest incredible loyalty stories we’re sharing each week.

It’s also the easiest place for you to find our show notes with links to everything mentioned in all of the episodes. You can sign up at letstalkloyalty. com.

Bill: Hello everyone. Welcome to The Wiser Loyalty Series brought to you by Let’s Talk Loyalty and The Wise Marketer. I’m Bill Hanifin, the CEO of The Wise Marketer Group, and I’m one of the two hosts of the Wiser Marketer Series, along with Aaron Dauphinee, who you see here, the happy guy over here next to me.

He’s our CMO. Good to be here together with you again. How are you?

Aaron: Absolutely good to have you back.

Bill: Good. So to set the baseline just for new listeners or people that haven’t, maybe don’t recall every week we are walking through interesting content in this series that ties directly to The Loyalty Academy courses that we have, and we try to pick out the hottest topics and then the most interesting aspects of each 1 of those topics and highlight those.

And so this month, we are focused on material that ties to our course number 108. Which is entitled the loyalty reward strategies and reward experiences. This along with many other courses in the curriculum are being refreshed and renewed and reinvigorated right now. So you’re going to hear really today a preview of what’s going to be in the refresh course.

So we’re getting you way ahead of the game here just by having this little conversation. So last week in episode 532, Aaron talked about a list that would be rather rewarding for your members. It was really good. He set the baseline for how to create a reward strategy. So, if you’re going to design reward strategy for program, there are key considerations.

There’s a list of 6, 7, 8 items that were there that that Aaron talked about, but he only went in depth on a couple of those. So, if you think, you know, he covered a subset of the subset, because the actual, complete list of all the considerations for a really solid reward strategy will be in the course that we’re going to be launching in about a month.

So, that’s set a really good baseline. But today we’re going to focus in, especially on attainable rewards and attainable rewards, we’ve had different words for it over time, but maybe the best thing I could do right now is to give you a real world example of so, you know, I love this too. Aaron.

Don’t we always say if you’re going to create strategy, you’ve got to, turn the table around and think of it as a consumer. So I love a business called Ace Hardware. It’s, you know, in the DIY business there, we have a lot of options. They’re big, some couple of very big box stores and Ace Hardware sits as an alternative to that.

Easier to park, really great help. Smart people inside the store. So it’s a nice shopping experience. However, they tease me with their loyalty program. They do have one and at every purchase, they asked me for my phone number. And so I dutifully give it to them. They put it in and seemingly nothing happens.

And I think what it really boils down to is, you know, there, there could in fact, be more value in that program that I even recognize, but the trouble is they’re not communicating. So only occasionally will I get white mail from them that mixes in some kind of a message about the rewards program, maybe indicates the points I have, but it’s right next to Spend 25 get 5 off, you know, with an asterisk of all the other items that are excluded for that offer.

So you end up getting this sort of consolidated message of promotions, a little bit of a loyalty message. And at the end of the day. I really can’t discern how to use my points or what they’re worth. The other thing maybe just to think about is that immediacy. They don’t do anything a point of sale saying, hey, Bill, you have 1000 points.

Do you know, you get 10 dollars off today? They don’t do that. So, to me, this is an attainability issue. Not even to say that the math is wrong. It’s just to say that the communications are or, and it’s just not coming clear to me. It’s coming through to me. So that’s an example in everyday retail.

Somewhat high frequency retail, but I know you’ve got better examples right in experiential type of businesses, but I think that really hit hard on this topic that we’re talking about attainable rewards.

Aaron: Yeah, I don’t know if they’re better, but they are different. How about we put it that way? Because okay.

You know, certainly when it comes to attainability, we think about having a spectrum of awards. Like, I talked about last week that allows you to, you know, whether it’s from discounts through to status benefits, or, you know, all the way through to the aspirational, like, on the lower end, the attainability should be there, particularly in the category you’re talking about.

So I’m a little bit surprised on your example. And sad to hear that because that spectrum reward should be obvious to you and you should be know what you’re going after. Sounds like they’re not even getting close to curated rewards, which I touched on a little bit last week as well, too. But really, I mean, I guess the point of bringing, bringing those two ups is really to say, you know, irrespective of the path you choose and how you create your awards catalog and words offering for your members and your customers you really can you know, Be almost a challenge for your consumers to get them to play.

If the attainability isn’t there at a minimum, like, if they don’t see some sort of path to I can get something in return for this, they’re just not going to, they’re just not going to participate. And so I, if I think about this in a, in rudimentary terms for my own life and use a personal analogy, so bear with me a little bit I’ll overshare as I always do.

I have a fear of drowning. Okay. It’s very irrational and I, you know, I realize that it’s irrational but I also own a boat and I’m willing to go out on the water. So people go, you know, how do these two things coexist? Well, the reality is if I cannot see land, then, you know, then I start to get this anxious element to me and I get the irrationality fear and the fear starts to kick in.

So that that’s the one thing is it’s when I can’t see land, but when I can see land, or at least when I have a perception that there’s the potential for me to survive, if gosh forbid, something went wrong. Then, and even whether it’s true or not, like, I could be too far for me to swim to, but the fact that I can see it, or there might be, you know, maybe it’s too much to say shark infested waters, but the logic of being able to get there is not proven, but because the perception is there, cause I can see it.

I then am on my way to feeling safety or getting to safety, which is, you know, in effect, the reward that I’m after and I perceive it to be attainable and possible to me. So therefore I have no problem going boating. So …

Bill:  You know, what’s interesting about that what I hear you talking about in a way is hope.

Like you, you have to have hope you have to see a boat close by. You have to see the island close by to have some hope. Like, I really, I think I can survive in the reward space. It goes back to some of the psychology of loyalty items that we talked about. You need to have this perception, this expectancy of value that it’s attainable.

And if that disappears, you lose that hope, but you might just disengage from the program.

Aaron: Yeah I agree. And that idea of hope or that aspiration for attainability, you know, really starts to play less in, like you say the lower commoditized items that you get as a reward. But when you get into experiential rewards or aspirational world rewards, like a lot of programs fall into a trap sometimes of there’s too much wow factor and not enough practicality, right?

, the practicality really needs to be there. And certainly in one category, like airlines, you know, we think about aspirational wars as often where we float, we literally fly to with travel you know, we can, you and I can rattle off a whole list of airlines. We won’t name the brands here, not to give them out, but a whole list that, you know, they have to adjust the rewards map for short and long haul flights so that there is a likelihood that someone redeeming.

Aaron: For their flights, who doesn’t travel as much as those who are high frequent travelers can actually attain something. They’ve got to put that possibility in there. Otherwise, they’ll lose a good portion of their member base. And then if you think about it, you know, here’s a bit of a heritage story if you will, because I grew up in the Air Miles family in my early years of loyalty.

You know, the original redemption was for one aeronautical mile. So you earned a dollar spend for, you know, related to how much you spent was related to an aeronautical mile for that everyday coalition program. And so the order of magnitude was like 20 to earn for one, one, one mile. Well, the, when you go to do a redemption, you know, the base absolute number was much lower.

Because of that, but when you compared it to other air frequent flyer programs, you know, where there was a dollar per point, you know, you would accumulate like 15, 20 thousand, 25 thousand points, and that was your redemption for a short haul flight. And so there became this incongruence, I would say, or a perception gap. But comparing that, you know, for Air Miles that became a, Oh, Air Miles takes too long because, you know, I, because they have both programs in their mind and they think, Oh, and they lose sight of all, I only need 2, 500 or 3, 000 miles air miles to actually redeem.

But they’re thinking in terms of these thousands and whether it’s true or not, because they haven’t done the math. Because of the absolute terms are so different. It really became a problem for them. And it’s one of the reasons they introduced what they called LMRO’s, low mileage redemption options to get that attainability for certain members and then keep them engaged.

And went on further after that to get to a bit more choice where they put the Dream Miles rewards or Cash Rewards. So people could have a choice between those two elements of attainability too, so.

Bill: What you just mentioned, is that referencing the tiered rewards you we’re talking about, you’d have some high value, aspirational rewards and maybe some daily rewards, things that are more readily attainable.

Aaron: Yeah, I think that goes to the spectrum of rewards conversation, right? Okay. Okay. You know, those are for people who are choosing to be in a program that might be about travel because that’s what they want. You know, I always say, if you want to know what Aaron wants to redeem for, just ask him, right?

And it’s going to be different than what Bill wants likely, right? And so there’s, I get this whole spectrum of things that could be low mileage redemption options or low point redemption options that are toasters or gift cards or things like that. Or even micro redemptions, if you get to, you know, the world of Starbucks type thing all the way through to these aspirational, but it’s these aspirational rewards and experiential rewards that really start to, you know, need to have that perception of that attainability.

And that’s the key thing. And a real quick story that I think many people know, but there’s gotta be some folks out there that haven’t heard about this, you know, to change categories, but keep within flying. Is the story of comes from CPG rewards with PepsiCo offering, you know, a sweepstakes to win a military jet.

And I think there’s even a documentary. John Leonard might be the gentleman’s name. It took him to court on this but, you know, we won’t go into the details because, you know, you can go sort that out yourself. But the construct here is really one around the fact that, you know, in some cases, most consumers said, Oh, that’s just razzle dazzle and being Grandiose marketing, right? When in fact, and that’s what, you know, Pepsi kind of was in the place where it was to make a remarkable Seth Godin type statement around the sweepstakes. But lo and behold, you know, this one gentleman went and found a way to, accumulate and get a path to being able to earn that reward.

And then Pepsi had to fall through and then they had to kind of, you know, walk fine line in terms of how they resolve that. So, so there’s the key thing is to balance out this idea of, you know, really perceiving these experiential types of things but making sure that they’re attainable.

And so that’s one of, on a poor side. If I do talk about a brand and I will say the brand this time, because I quite like what they’ve done it’s Hyatt actually, as they moved into much more of a lifestyle and a premium lifestyle brand as for the entire Hyatt brand first, they also took on the loyalty program to follow with that.

And so that loyalty program is now has, you know, that idea of when you redeem for things, it’s about creating moments that matter. Their redemption and experience are things. And I think I mentioned this quickly last year about, you know, Taking a cooking lesson with a Michelin star, an executive chef at one of the restaurants or if you’re out in California, you know, you can do yoga in the Redwood forest.

Like those are just a couple of examples but the point being that it matches with their brand value proposition and the loyalty value proposition coincides with that. And so they get that grandiose wow factor, remarkable, whatever term you want to use that leads to the moments that matter.

And at the end of the day that’s really the key thing is that you need to get moments that matter in the rewards catalog whether they’re simple or more experiential and people need to have people attaining them and getting to them so that they can talk about them to then file in and get more individuals to follow suit.

So that’s kind of my thought to start out.

Bill: That’s really good. Well, you know, I’ll say this and I wish at the time that we have to be really kind of precise with what we’re talking about. But I feel like this attainability issue has always been a deal killer for me. It makes her break. The success of your program, and I can’t tell you how many times that we’ve created something that we thought was clever in the way of a value proposition.

And then we did some math. We did. We do use case examples of this profile, a group of customers that had these shopping habits. They’re going to spend X in these different categories. What would they earn over the course of the year? And when you. When suddenly you do an exercise like that and you have five or six different customer groups, and then you see how it falls out and you realize that three out of the five groups are going to get the equivalent of something very small.

That just doesn’t matter that much for all the patronage and all the loyalty and everything else, you know, you have more work to do. So this attainability issue is really important, isn’t it?

A hundred percent. A hundred percent.

Yeah. All right, everybody. Thanks for being here with us from the wiser loyalty series with Let’s Talk Loyalty, Wise Marketer.

Aaron, what are we going to cover next time? Do you know?

Aaron: Yeah, we’re going to continue down the path of rewards. I won’t let the cat out of the bag just yet in terms of what we’re doing. So it’ll fall on these key considerations and pull out something cool and and more forward leaning for sure.

Bill:  And you know what? We’ll keep it interesting and we’ll keep it rewarding. So we’ll see you next time.

Aaron: Stay loyal as always.

Paula: This show is sponsored by Wise Marketer Group, publisher of the Wise Marketer, the premier digital customer loyalty marketing resource for industry relevant news, insights, and research. Wise Marketer Group also offers loyalty education and training globally through its Loyalty Academy, which has certified nearly 900 marketers and executives in 49 countries as certified loyalty marketing professionals.

For global coverage of customer engagement and loyalty, check out thewisemarketer.com and become a wiser marketer or subscriber. Learn more about global loyalty education for individuals or corporate training programs at loyaltyacademy.org.

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