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The Importance of Perceived Value When Selecting Rewards for Customer Retention and Acquisition

The ultimate goal of any consumer reward scheme is attract and retain customers, but sourcing the right reward can be a challenge. While you can settle on a specific type of reward, there is a risk that you will be basing your choice on what you value or assumptions about what your client’s value. This can quickly limit the number of people that engage with your scheme. A more flexible approach could lead to greater results.
Choosing the right reward can be a challenge. You need to decide on something enticing to the consumers you are trying to attract and retain, something that reflects your brand’s values and something that won’t nibble away too much from your bottom line.
Understanding your brand values and the physical costs of a reward is relatively easy to do, but finding something that is attractive to your customers and potential customers can be surprisingly difficult. There’s a simple reason for this: perceptions of value are often based on your assumptions about the customers you are trying to retain or the customers you are trying to attract.

Avoid making assumptions if you want to improve customer retention

For example, if you assume that everyone who knits is a female septuagenarian that lives in the home counties then that will point you in the direction of a certain type of reward. And that’s not always a safe thing to do because you could be missing the large slice of urban knitters, a demographic that could be, incidentally, very willing to engage with your brand on social media.

An effective reward programme can do three things:

  1. It can attract and retain customers
  2. It can give you the data you need to challenge assumptions about both your existing customers and those you would like to attract
  3. It can inform you about potential directions for your product range

There’s nowt so queer as folk

The challenge is that everyone places different values on different things. One person that’s going to a garden centre to buy flowers for his mum might not see much value in being offered 10% off some secateurs, but another might. And the level of reward is also important: Would 20% off the secateurs lead to a different outcome? Would 30%? How close do you get to the tipping point where the reward stops making economic sense for the retailer?
Your perception of value could be utterly different from the people you are trying to attract, and neither of you are necessarily right or wrong but if you are trying to nudge behaviour towards your brand, being stubborn about what your consumers will see as a reward could mean that your strategy is not as effective as you’d hoped.
Giving the consumer flexibility in how they spend their reward is often a good way to get the best out of a reward strategy, when combined with effective communications.
In a survey that we carried out in support of our recent white paper, The Evolution of Reward Technology, a whopping 87% of consumers said that they wanted the option of both digital and physical gift cards when purchasing online or via mobile apps. They want flexibility.
While this survey was carried out with a specific demographic, even if the proportion is 25% lower within the wider population, it seems that the majority of consumers are likely to respond more favourably to a scheme that lets them set their own value on a reward because it’s letting them use it as they chose, rather than corralling them into making a specific purchase.

Make it easy for customers

Given the rise of technology and clamour for attention from the high street, out of town shopping and internet retailers, having a reward strategy that cuts through the noise can really help a business.

We would recommend looking to a reward scheme that has broad appeal and doesn’t make assumptions.

Skipping the whole process of trying to guess what value a potential customer will put on a particular reward can save a lot of time and effort and lead to a better result.