Why instant rewards work better than loyalty points

Why instant rewards work better than loyalty points

With a point-based loyalty program, you’ll reward your consumers as soon as they have collected enough points to “deserve” their rewards. You’ll build a whole system of points and thresholds to gratify consumers proportionally to their level of engagement.

But if you want to strengthen brand loyalty, you can also choose to implement instant rewards campaigns. In this scenario, you’ll reward your consumers every time they complete a specific action of your choice – traditionally a purchase, but it can also be filling out a form, or answering a survey. This is very much like the free gift in your cereal pack.

Many brands implement complex point-based loyalty programs, but I would strongly advocate to leverage instant rewards instead. In my opinion, this is the most flexible, cost-efficient and innovative way to engage your consumers. Below are the detailed reasons why I believe so:

1- Tackle Low Threshold Consumers
For some consumers, if the initial point threshold is too high, they don’t see any value in participating in your loyalty program. You ask them right away for an engagement to which they can not commit – at least in their minds-, and there’s no way they’ll be impacted by any point-related offers you’ll push them. On the contrary, instant rewards help you tackle this (huge) segment of low threshold consumers by rewarding them instantly for the action of your choice. Those consumers will be sensitive to any immediate offers, whether it is a discount or a reward. If you are to start a long-term relationship with them, you’ll have to be the one initiating it with a gift as soon as possible.

2- Leverage Instant Gratification
For ALL consumers, it’s been proven that being rewarded right away contributes to building a strong and meaningful experience with a brand. Indeed, when a reward comes at the right time, the end-consumer values the interaction far more. Similarly to the satisfaction created when you get a free candy with your restaurant’s receipt, or when you’re offered a lipstick with the purchase a new girl magazine, the fact that you get it right now is delightful – indeed you would not have waited two days to get your free candies… Immediacy brings the loyalty experience to the next level and triggers a memorable relationship with the consumer.

3- Spare Money With Low Cost Rewards
When you chose to go with instant loyalty rewards, you bet on creating a rewarding moment with your consumers, that they’ll remember for a long time. In the end, the price of the rewards does not count as much as in a loyalty point-based system, where consumers are incentivized by valuable gifts. Indeed, instant rewards are all about the surprise and the delight of being offered a little something, even if it’s only a $1 song, movie or app. What matters is the experience, the reciprocity, the generosity, and the gesture. From a financial standpoint, this can be an efficient and effective manner to strengthen bonds with your consumers while keeping an affordable loyalty budget. This is the most flexible solution to run your loyalty campaigns as frequently as you’d like, accordingly to your budget.

4- Alleviate accounting difficulties
Accounting wise, it can be very complicated and tricky to deal with a point-based loyalty system. Indeed, once you are dealing with points, it’s hard to record points that have been distributed in your balance sheet. For some companies, points are considered as frozen costs, even if the consumers have not exchanged their points for real rewards yet – which can hurt the bottom line. For other companies, points are not recorded until they’re redeemed into real gifts, which can flaw your company’s financials. With instant loyalty rewards, you don’t have that time difference between the “reward credit” and the “reward delivery”; which greatly simplifies accounting issues.

If you are a newbie in the loyalty space, instant loyalty rewards are the more cost-effective solution than complex point-based loyalty programs; and are a lot easier to implement. Keep that in mind to make your business decisions.

Michael Amar, Ifeelgoods’ CEO & Co-founder