Yes, retailers can also reward non-transactional behaviors
Keith Lu, Senior Business Analyst, Global Solutions, LoyaltyOne
Through a special arrangement, what follows is a summary of an article from COLLOQUY, provider of loyalty-marketing publishing, education and research since 1990.
Most loyalty programs boil down to incentivizing customer transactions with rewards — make a purchase and receive a point, free item or coupon. But beyond the traditional system, a big opportunity lies in rewarding shippers for non-transactional behaviors to enhance their overall shopper journey.
The first step in moving beyond transaction-based incentives is quantifying value. Quantifying the value of a transaction is straightforward — the value is guaranteed. But understanding the value of incentivizing non-transactional behavior in the pre-transaction and post-transaction phase is more difficult because the result of those efforts is expected value, not tangible.
As an example of expected value in practice, a store selling widgets for $10 attracts 100 potential customers and sells 10 units in a single week, implying that each customer has an expected value of one dollar. To remain profitable, an incentive value from zero to $1 per customer can be used to increase foot traffic (and, accordingly, sales). It may seem illogical to reward a customer for walking into a store or watching a commercial, but non-transactional behaviors can indirectly impact sales.
The next step is uncovering which non-transactional behaviors drive sales by analyzing your customer data:
- Does your customer data suggest that a group of customers are more likely to make purchases after sampling? If so, tying loyalty rewards for trialing products could accelerate customers in the pre-transaction phase and increase their probability of a purchase.
- Does customer feedback indicate returns are driven by a lack of product knowledge and a failure to realize value? Offering rewards that incentivize their use several times post-purchase could reduce returns by reinforcing the purchase and preventing buyer’s remorse.
- Are Millennials indicating they trust online content produced within their own networks over traditional advertisements? Rewarding customers who generate and share trustworthy online content on social media could be a more effective way to attract new customers and potential sales.
At the end of the day, what you do before and after the point of purchase is fundamental to ensuring that transactions both occur and reoccur.
- Using Loyalty To Incentivize Non-Transactional Behaviors – COLLOQUY
DISCUSSION QUESTIONS: What advice would you have for retailers trying to drive loyalty through non-transactional behaviors? Can you add any other effective ways of rewarding non-transactional behavior? Is the outreach opportunity larger pre-transaction or post-transaction?