Do consumers want experiential rewards?

Source: Kohl's - "Behind the Scenes at the LC Lauren Conrad Festival Collection Photo Shoot"
May 08, 2017
Tom Ryan

In March, Kayla Watters, a Kohl’s Yes2You Rewards member, participated in a fashion shoot in Palm Springs to support the just-launched LC Lauren Conrad Festival Collection.

Her modeling debut came, in part, because Ms. Conrad, the TV personality and fashion designer, was pregnant and unable to front her label. Instead, the brand turned the situation into an engagement opportunity. Said Ms. Conrad in a video, “I really love the idea because it’s a way to say thank you for supporting the line.”

In a column in Forbes, Bryan Pearson, president of LoyaltyOne, said the Kohl’s photo shoot exemplifies how brands are turning to “one-of-a-kind reward-program experiences” to deepen engagement as well as learn from customers about what matters most in their brand experiences.

The trend comes as research from Capgemini Consulting finds 97 percent of loyalty programs rely on transactional rewards, or largely some discount. A survey from COLLOQUY in 2014 found that 54 percent of consumers were unhappy with the reward options offered by their favorite brands but were open to receiving tickets to live events as rewards.

Mr. Pearson cited a few other examples of experiential rewards:

  • My Coke Rewards: The service customizes bottles for bride and grooms, offers options to donate points to local schools and holds sweepstakes such as a chance to win a $24,000 home makeover.
  • Neiman Marcus InCircle: For Circle Three Members (annual spend – $2,500 to $4,999), a complimentary service tracks down hard-to-find tickets to events, makes dining reservations at top restaurants, and handles travel arrangements including creating dream itineraries.
  • Marriott Rewards Experiences Marketplace: Recently, Marriott auctioned off a chance to stay in one of eight tricked-out tents mimicking one of its boutique hotel rooms at the Coachella music festival.

“Important to these experiential reward strategies is that each is sized up to its audience,” wrote Mr., Pearson. “From Kohl’s branded photo shoots to Marriott’s customized tents, each brand uses its program data to develop reward options that hit the relevant sweet spots of its core members.”

DISCUSSION QUESTIONS: How do you see experiential rewards supplementing transactional rewards in loyalty programs? Should experiential rewards be reserved for best customers?

"The trick for retailers is to understand that not all of their customers want a “one-size-fits-all” programs and to tailor their offerings accordingly"
"...let’s not forget that not every manufacturer is in a position to reward every customer in a unique way..."
"With big data, however, these experiential lagniappes can bring big benefits to retailers across the board..."

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21 Comments on "Do consumers want experiential rewards?"

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Anne Howe

Rewards that “money can’t buy” are always desirable to shoppers! So are the posts, pictures and reviews that accrue lots of social capital to the sponsoring brands.

Charles Dimov

Right on the money! Create an experience for your customers that they will talk about at the dinner table, that they will post about on social media and that they will discuss with their friends. That’s the way to a consumer’s heart and loyalty.

Max Goldberg

Consumers are bored with transactional rewards. Experiential rewards offer a break from the routine, are attention-getting and reset consumers’ minds towards participating loyalty programs. More retailers should offer them. It takes some creativity to bring experiential rewards to a traditionally transactional program, but if the rewards are creative and reinforce the retail brand’s core story, they can pay off in increased customer loyalty and may garner some great publicity.

Dick Seesel

Some cardholders will always opt for the deepest discount and the best deal, but retail loyalty programs built around overlapping offers (and nothing else) risk hitting a wall — not to mention eroding the margin potential from some of their most frequent customers. Bank credit cards tied to specific airline or hotel programs (or offering a broad range of choices) figured out the power of experiential rewards a long time ago. The trick for retailers is to understand that not all of their customers want a “one-size-fits-all” program and to tailor their offerings accordingly.

Lyle Bunn (Ph.D. Hon)

Gift with purchase has been a longstanding loyalty reward and promotional strategy. When an experience is the gift, I think that consumers could see this as an even more valuable thank you, because such a gift responds to higher needs as Maslow defined them. Experiences can be shared or spoken of with others, which amplifies the brand, and since some element of time is involved they may be seen as more exclusive or rare, which adds to their social currency. Gifts are good, experiences as gifts are the best.

Art Suriano

I think rewards programs are a good idea however they have become too familiar, with most companies basing them on a purchase. A real rewards program “rewards” a customer for being loyal and some companies do an excellent job. For example, I have DirecTV owned by AT & T. Being a subscriber with either company provides the customer with free movie tickets on Tuesdays. Going to the movies doesn’t make me add channels to my DirecTV subscription, but it does make me think twice about changing services. So creative reward programs with enjoyable offers for the customer is a splendid idea.

Charles Dimov

Being realistic, retailers need to tier their experiential rewards. Yes you want something for the best customers. Give them an experience that deeply rewards their loyalty, extreme devotion, dollars spent, attention garnered and social responses brought to you.

However, you also want some experiential rewards that are tougher to get. This means shoppers need to make a concerted effort. Make the reward sweeter, but make it attainable enough that you engage consumers. Set the bar too high and most people won’t even try for the reward. Make it achievable and you can have the masses engaging with your retail brand! That’s a winning formula!

Bill Hanifin
Experiential rewards are effective for brands to offer ways for customers to connect with the brand on a deeper level. The examples shared in the article show how imagination can be applied to make that deep connection through varied means. It’s important however to make sure that we understand the distinctions between the earning and redemption opportunities mentioned in the article as well as to clarify the findings in the Cap Gemini report. The Cap Gemini report, as I understood it, made the point that most loyalty program members wanted to have the opportunity to “earn” in a loyalty program beyond transactions. There was a list of non-purchase behaviors listed in the report which included posting on social streams, uploading content and similar social network behaviors that promoted the brand. The report seemed to focus more about the “earn” side of the equation rather than experiential rewards. The photo shoot example in this article illustrates a fantastic way to provide a valued customer a once-in-a-lifetime experience. I’m not sure how Kayla qualified for the photo shoot, i.e., did she win it in an auction or another method? Auctions are effective not only to provide unique experiences to program members, but… Read more »
Pavlo Khliust

Experiential rewards are an excellent supplement to conventional loyalty discount/transactional rewards programs. Experiences offered through such programs should be tailored to a specific, focused group of clients rather than the best customers only. Companies can then leverage gathered information to make their future marketing campaigns more appealing to their target audience, thus broadening that audience.

Lee Kent

From all I’ve read and seen consumers love these rewards — as do I! However, not every experience will be desirable to every consumer so it will behoove the retailer to offer some variety in rewards. Should they be reserved for only the best customers? Not all of them, but surely offering private rewards to the top tier can be a good idea if done right. That is, without offending other customers.

And that’s my 2 cents.

Susan O'Neal

I had a moment a few years ago when my actual everyday self slapped my professional self and said something like, “seriously Susan, if you tried to create trust and loyalty with your friends and family the way you invest in creating loyalty with consumers they would all leave you!” My point is that it’s time for the relationship between companies and consumers to evolve into something beyond “you scratch my back and I’ll scratch yours.”

Gene Detroyer

Loyalty programs have become so ubiquitous that it is hard to keep track of them or think about specific ones and what rewards they might garner. For every retailer program, I simply take discounts — ”please don’t make me think about accumulating or using points.”

For travel programs (hotel, rental cars, airlines), I earn points on business trips and use the accumulated points for pleasure (hotels rooms, cars and tickets). I have more than 1 million points/miles on three programs so I could certainly take the experiences, but why? If I wouldn’t buy the experience, why would I want to use my points?

Maybe the promotion of these experiences increases the profile of the program and gives people a dream. But I don’t think in reality of the vast majority of users really use them.

Ryan Mathews

Let’s not forget “real” people — you know, those guys with fixed incomes who like discounts. And let’s not forget that not every manufacturer is in a position to reward every customer in a unique way — unless said customer spends a good deal of money. In the case of Coke for example, that kind of customization is possible because it’s relatively cheap and acts as ever-cheaper advertising and is a fizz in the bucket of lifetime consumption costs. So yes, there is some room for experiential marketing but it’s not a magic wand.

Ralph Jacobson

I agree that experiential rewards are a win-win for both the consumer and the retailer. The interesting aspect for me is that experiences for the consumer can be unique, lasting and “priceless” while the retailer providing these experiences can often create them very inexpensively or even for “free.”

Brandon Rael

Experiences and adventures beyond tangible products, clothing and electronics are the most memorable. In fact, the most critical part of a loyalty program is building, cultivating and maintaining a sense of community with your most loyal consumers. How better to achieve that than by offering your biggest fans an experience-based reward that money cannot buy?

I believe there was an old American Express commercial slogan back in the ’80s-’90s — “Membership has its privileges.”

Camille P. Schuster, PhD.

Experiences can be special and unique. Millennials definitely value experiences, but I think many customers beyond that demographic would as well if the experiences are something that would appeal to them.

Adrien Nussenbaum

Just like consumers like a wide array of product choices, they also like an array of rewards. There are certain experiences that will be worth more than money, but discounts and money back are always things that will be of interest.

Scott Magids
1 month 20 days ago

New Orleans cafes, bakeries and other customer-focused organizations have a tradition of what’s called a “lagniappe,” a French term loosely meaning “a little extra something.” It’s the extra donut in the box you weren’t expecting, a café au lait on the house, and other little benefits that some shopkeepers bestow on their favorite customers.

Transactional rewards do make it easy to track data while experiential ones may be less formal and more customized. Few people will turn down a discount of five dollars once they have accumulated a pre-set spending level, but it doesn’t offer anywhere near the emotional connection forged by the more personalized and direct nature of experiential rewards. With big data, however, these experiential lagniappes can bring big benefits to retailers across the board, giving them an opportunity to get to know what their customers want, and what sorts of benefits will resonate best with each subgroup. It doesn’t have to be limited to a small group of “best customers,” rather, experiential rewards – driven by detailed analytics – are an excellent way to forge those close relationships from the beginning.

Doug Garnett

If one has a rewards program, it’s good to keep the rewards fresh. That said, freshness is secondary to making the rewards consistently meaningful — the area where I find in my personal experience that many programs fail.

But let’s not get carried away. Experiential rewards may not be a bad idea — they probably even do a bit of good. But how much?

It’s unlikely that adding experience rewards will make much difference for your business — they’re a small effect mechanism. I’ll suggest reading up on some of Byron Sharp and Anne Sharp’s work on rewards for more insight. Here’s one starting point.

Dave Nixon

If we can get retailers to share rewards points and programs across other brands (use your points wherever you want in the “network” — an expanded version of Plenti), and your financial institution, the customer will drive how and where they get to engage with rewards programs. With the right type of affiliate partners, could be a creative way of breaking down the traditional transactional loyalty programs.

Ricardo Belmar

Experiential rewards are great engagement opportunities for brands not just great rewards for loyal customers. The social media potential and goodwill for the brand is tremendous when the loyalty member goes online to share the experience. While this may not be suitable for all customers, that’s not really the point. Brands should be using these one of a kind experiences to help promote the “awesomeness” of their loyalty program when promoting to consumers. This is a great example of the gamification of loyalty programs — people love the aspirational nature and competitiveness aspect of trying to achieve the rewards tier that gives them that unique experience. Ultimately it makes loyal customers even more loyal while they buy more of your product!

"The trick for retailers is to understand that not all of their customers want a “one-size-fits-all” programs and to tailor their offerings accordingly"
"...let’s not forget that not every manufacturer is in a position to reward every customer in a unique way..."
"With big data, however, these experiential lagniappes can bring big benefits to retailers across the board..."

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