Four reasons why gifting programmes are better than traditional loyalty programmes

Hint: Gifts come with no terms and conditions.

Loyalty programmes have been around since retailers started mass-producing little bite-sized discount cards called “coupons” in the early 1900s. But similar to the landline, MySpace or the walkman, the effectiveness of these products or services needs to be constantly considered and updated. A by-product of our scrolling and swiping is the fluidity of brand loyalty but despite this, loyalty programmes have remained without substantial innovation.

Airline loyalty programmes ranked yearly explicate the slowness with which large-scale loyalty programmes change. What points can get you from one year to another might vary, but everything else remains the same, so no true brand loyalty is created. Furthermore the loyalty schemes can be confusing and the barriers to accessing the rewards can be endless. As many as 35% of frequent flyer users admitted that they didn’t know how to track or redeem their mileage rewards which explains why 40% of all miles expire. Our answer to the clutter that is layers and layers of loyalty terms and conditions is simple: instead of spending a huge budget on facilitating a loyalty programme that might prove ineffectual - give a gift to create loyalty. Below, five reasons why you might reconsider your approach to loyalty and look at gifting as an alternative to traditional programmes.

Loyalty V3

No Strings Attached

Nowadays, we are bombarded with the copy and pasting of codes, of "20% off if you order by midnight" or the promise of a free coffee if you accumulate enough stamps. It all feels somewhat frantic and conditional, and you are generally plagued by the feeling that a catch is about to reveal itself just as you reach the check-out. Gifting programmes allow for the simplicity of receiving something without the ticking of boxes or the reaching of a pre-ordained target. There is no quid-pro-quo. A gift arrives at a door with the purpose of delighting the customer and relaying a message of appreciation.

A Gift is Always Unexpected

Traditional loyalty programmes quickly become stagnant and expected, to the point where we feel cheated if we are not offered some form of price reduction. A reward becomes synonymous with “saving” money on delivery or justifying a second pair of shoes instead of something that stays at the front of your mind when considering the brand. Surprise then, is something loyalty programmes often fail to achieve. Gifting programmes are more effective because the customer will not receive a gift a month nor the same gift twice, as the gifts will always be contextual, impactful and most importantly, unexpected.

Traditional loyalty programmes quickly become stagnant and expected, to the point where we feel cheated if we are not offered some form of price reduction.

Gifts Create Brand Advocates

Creating brand advocates doesn’t follow a particular set of rules, but there are some absolutes. Brand advocacy stems from the positive building of a relationship between the brand and customer, a positive relationship that is forged via care and thoughtfulness. That kind of positivity cannot be made simply through the meagre offerings of reduced prices and unspecified rewards systems. It is imperative that the customers feel valued and special which requires a tailored approach to loyalty. In terms of impactful gestures and the creation of advocates - contextual gifting hits the nail on the head. What happens when you begin building a strong base of brand advocates? They start talking. And it’s widely recognised that people place more trust in the words of their peers than in say, an ad. In fact, 88% of consumers placed the highest level of trust in word-of-mouth recommendations from people they know.

A Balancing Act of Give and Take

Balancing the bottom line of a traditional loyalty programme is not an easy task. Loyal customers tend to receive a discount at every turn, the action itself beginning to mirror something of the bribery of children with a bottomless bag of sweets. A cycle of fear develops around losing customers and having low retention rates which can be financially strenuous and often bears little fruit. Gifting programmes instead act as a compliment to both brand and customer. Contextually relevant experiences that surprise and delight as opposed to simply offering that which is expected--discount codes and repetitive, lacklustre offers--is more impactful. Yes, you’re spending money, but the money is active - it’s allocated toward making your customers happier and generating buzz around your product. Instead of cheapening your brand, it’s adding to it, accentuating your values and company ethos.

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