The rewards portfolio

Abstract

The types and value of the rewards available for loyalty program participants to redeem, is one of the most critical design elements of a successful loyalty program. It is the gratification a participant enjoys for undertaking the value-added behaviors the program has encouraged, such as repeat purchase of a firm's goods and services. There are two types of rewards that are commonly found in loyalty programs. The first are termed economic rewards, also referred to as hard benefits, where the expected benefit of an economic reward is an economic value proposition or savings advantage in return for being an active program member. The second kind of rewards are non-economic rewards, or soft benefits, and focus on creating attributes within the loyalty program that are difficult for competitors to replicate whilst creating value for the program member. Getting the right balance between the mix of soft and hard rewards is the key to ensuring that the loyalty program delivers the expected return on investment. This chapter looks at the range of soft and hard benefit rewards that are used in loyalty programs and the critical elements such as the redemption process, setting objectives and ensuring that the value of the reward selected is equivalent for the effort to attain the reward, all of which contributes to delivering on the loyalty rewards promise.