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7 Reasons a Points-Based Loyalty Rewards Program Is So Effective

  • author

    Heather Munro

  • posted

    Jun 09, 2022

  • topic

    Digital Marketing

7 Reasons a Points-Based Loyalty Rewards Program Is So Effective

You probably already know that acquiring new customers costs more than earning repeat business from existing ones. In fact, the Harvard Business Review reports that depending on which industry you’re in — and which study you refer to — acquiring a new customer is anywhere from five to 25 times more expensive.

While a loyalty rewards program is ideal for retaining customers, you may be surprised to learn these programs can also turn your customers into powerful advocates who attract new ones. Rewarding customers who promote your business online and through word of mouth, for example, can help you generate more leads and increase online reviews that build your brand’s reputation.

READ MORE: How to Decide Between Instant Rewards, Sweepstakes, and Points Programs

How to Reward B2B and B2C Customers With Points

You may be thinking retailers, fast-casual restaurants, and airlines are the only types of businesses that can use points to nurture a customer community like this. But any business looking to increase customer engagement can benefit from a points-based loyalty rewards program.

Of course, you can give points to a customer who makes a purchase from you, but you can also reward customers for actions like submitting a customer referral, participating in a case study interview, answering another user’s support question, or completing a feedback survey.

You simply assign a set number of points for each behavior you want to reward, maybe 50 points for attending a webinar and 200 points for referring a new customer. When customers reach a milestone of 500 points, you invite them to select a reward, like a digital gift card.

Here, we break down why points-based rewards and incentives are so effective for building a customer community, no matter what industry you’re in.

1. Points Are Easy to Understand

After so many years of collecting credit card points, airline miles, and video game leaderboard scores, your B2B or B2C customers grasp the concept of points in an instant.

2. Points Are Empowering

Points that add up to a gift card the customer chooses put the power in their hands, with clear milestones that reward them for their actions — actions that support the growth of your business.

3. Points Are Flexible

You can award points for whatever marketing measures you want to move the needle on, including joining events, creating content, buying products, speaking on webinars, and leaving online reviews.

4. Points Are Efficient

Physical items like T-shirts, gadgets, or water bottles are expensive to purchase and ship. Not only is awarding digital points more cost-effective, you don’t have to manage costly re-shipping of lost packages, plus you’re reducing your company’s carbon footprint.

5. Points Work for a Global Audience

Digital rewards streamline how you engage with and reward customers wherever they may be, especially now that online businesses need an international game plan.

6. Points Offer Freedom of Choice

Enabling your customers to choose the rewards they prefer themselves — such as a gift card to a restaurant, hotel, or store — reduces the risk of giving rewards your customers don’t care about. Plus, you get valuable data on customer motivation. You can even offer the option to donate the reward for those customers unable to or uncomfortable with accepting it.

7. Points Support a Positive Customer Experience

These days, the name of the game is keeping your customers — and potential customers — engaged. Points-based rewards are a simple strategy that can help you get off on the right foot with new clients and incentivize responses for feedback surveys.

Customers aren’t the only ones who respond well to a loyalty rewards program — your employees do, too. Learn how to build one with 4 Tips for Creating Effective Employee Points Reward Programs.

about the author
Heather Munro

Based near Boulder, Colorado, Heather is a copywriter who has been writing in the retail and B2B space for more than 20 years.

Based near Boulder, Colorado, Heather is a copywriter who has been writing in the retail and B2B space for more than 20 years.