At LoyalTree, we encourage all of our business owners or loyalty program managers to fill their rewards store with a healthy mix of experiential rewards and transactional rewards. Having a good mix is very important for having a successful program so this post is devoted to explaining them clearly and describing the benefits of each.
A transactional reward is when a percentage or dollar amount discount is offered. The actual experience of eating at your restaurant, getting a massage at your spa or shopping at your store stays the same. At the end of a customer’s usual experience, she or he receives a discount.
An experiential reward changes the actual experience of receiving your services. Either a new, unique, personal experience is offered, or the existing experience is heightened in some way. Here are some of our favorite experiential rewards offered by LoyalTree business owners to serve as examples:
– Private Sushi Rolling Lesson at 1000 points
– Name a menu item after you at 1500 points
– Private Authentic Mexican Breakfast for 6 at 2500 points
Experiential rewards and transactional rewards each have ideal uses. Transactional rewards are great for enticing new customers to give you a try, or incentivizing a repeat visit. Transactional rewards can be used to appeal to a younger or lower income demographic. Using a loyalty system that allows you to keep track of and stay in touch with customers who redeem a discount reduces the risk involved with offering a transactional reward to attract new customers. (Deep discount services like Groupon or Living Social can be harmful to your bottom line, and offer no way of keeping in touch with new customers who redeem their coupons. Fortunately, we know of a loyalty system that solves that problem!)
Experiential rewards are great for encouraging loyal customers to save up points, rather than spending their points right away on less valuable rewards. Experiential rewards also tend to appeal to a higher income demographic who are less concerned with saving money and more interested in VIP treatment. Experiential rewards can come at little or now cost to you as a business owner, depending on what you offer (ie: sushi rolling lesson or naming a menu item in honor of a long standing loyal customer). The possibilities are endless! Experiential rewards also encourage organic social media engagement, as your customers are more likely to generate original content about a unique experience than a transactional reward. This type of engagement is great for your net promoter score.
Have some great ideas for experiential rewards? Leave us a comment to share!