)
)
Did you know, according to research done by Capgemini, that 97% of reward programs focus solely on transactional rewards, yet 44% of shoppers find them irrelevant?
The key to building lasting customer loyalty lies in experiential rewards, which outperform traditional incentives. With 78% of millennials preferring experiences over material goods, brands are tapping into a deeper emotional connection.
Offering experiences helps create lasting memories, making customers more engaged and loyal. Let’s explore why these programs are more effective and how you can leverage them to strengthen your brand's relationship with consumers.
Experiential loyalty revolves around offering rewards that focus on creating memorable, emotional experiences rather than material or transactional incentives. These experiences help form strong emotional bonds between the brand and the recipient—whether customers, employees, or partners—leading to deeper engagement and long-lasting loyalty.
Research consistently shows that experiential rewards are more impactful than tangible ones, as they tend to evoke stronger emotional responses and create lasting memories.
Experiential rewards can range from exclusive events like private dinners or concerts to once-in-a-lifetime travel experiences or behind-the-scenes access to unique brand experiences.
Such rewards help cultivate a sense of exclusivity and appreciation, making recipients feel valued in a way that a simple discount or voucher never could. They create a narrative that individuals want to share with others, increasing brand visibility through social media, word-of-mouth, and shared experiences.
Bernd H. Schmitt, a professor at Columbia University, emphasises that experiential marketing focuses on the experience of consuming a product or service, making the experience the product itself.
Experiential rewards are a strategic way to build emotional loyalty, encouraging recipients to feel closer to the brand. Furthermore, these rewards are not just about creating positive memories, but also about aligning the reward with the recipient's personal interests or values, making the reward feel deeply personalised and relevant.
Additionally, experiential rewards have tangible business benefits. They foster a sense of community, especially when recipients share their experiences.
For example, customers might post about their VIP access to a brand event, making others want to engage more deeply with the brand. Also, experiential rewards help reinforce positive behaviours. When a customer earns a luxurious experience as a reward for continued loyalty, it subtly reinforces their purchasing behaviour, encouraging them to keep engaging with the brand.
Moreover, these rewards offer greater longevity in terms of emotional impact. While material rewards may be used and forgotten, the emotions and memories tied to a great experience tend to last much longer.
By offering memorable, personalised experiences, brands can increase customer retention, boost employee motivation, and create stronger relationships with all stakeholders. Experiential loyalty programs tap into human desires for recognition, adventure, and connection—creating powerful brand advocates who are likely to stay loyal for years.
|
Aspect |
Experiential Rewards |
Traditional/Transactional Rewards |
|
Personalisation |
Highly personalised; tailored experiences based on customer interests |
Generic rewards like discounts, cashback, or points, without individual consideration |
|
Emotional Impact |
Creates lasting emotional connections and memorable experiences |
Primarily cognitive, based on the immediate value or money spent |
|
Engagement |
High engagement; customers actively participate in unique experiences |
Passive engagement; rewards are earned through purchases and are not personalised |
|
Social Aspect |
Encourages social sharing and bragging rights (e.g., VIP experiences) |
Rarely shared; monetary rewards are often seen as private transactions |
|
Perceived Value |
Higher perceived value due to the unique, memorable nature of the experience |
Lower perceived value; customers may forget material rewards over time |
|
Non-Transactional Nature |
Focuses on recognition and celebration, not just the transaction |
Transaction-based, often tied to purchases, which may dilute recognition |
|
Long-Term Loyalty |
Builds long-term, emotional loyalty through meaningful experiences |
Often promotes short-term engagement with little emotional connection |
|
Competitive Parity |
Help brands stand out in competitive markets by enhancing their premium or exclusive image. Personalised experiences foster customer loyalty, boost brand awareness and encourage word-of-mouth promotion. |
Easily matched by competitors, making it hard for brands to stand out or differentiate their offerings and retain customers in competitive markets. |
|
Implementation |
They are resource-intensive and costly, requiring significant investment in time, money, and human resources. Businesses must weigh the financial implications and ensure the return on investment justifies the expenses. |
Easy to implement, making them accessible for any brand. Automated loyalty platforms streamline tracking, optimise operations, and enable quick program launches, allowing brands to reap benefits without extensive setup. |
|
Scalability |
Scaling experiential rewards is challenging due to their personalised nature, which adds logistical complexity. Innovative solutions or partnerships may be needed to preserve quality while expanding to a larger customer base.
|
Easy to scale with standardised rewards such as discounts or points |
|
Cost vs. ROI |
Higher upfront cost but greater long-term ROI through loyalty |
Lower upfront cost but potentially lower long-term ROI if overused |
|
Flexibility |
Offers variety in terms of experiences that can be customised |
Limited flexibility; rewards are typically fixed and easily replicated |
Transactional rewards, or ‘hard benefits’, generate short-term loyalty by providing immediate, quantifiable benefits and delivering instant gratification. They are effective at attracting new members, reactivating dormant customers, and preventing churn. These rewards encourage engagement and repeat purchases, and provide immediate satisfaction.
On the other hand, experiential rewards, or ‘soft benefits’, foster long-term brand loyalty by creating deep emotional connections with customers through unique and memorable experiences. They require more manual effort to implement and are best suited for rewarding top-tier customers.
A balanced approach using both types can lead to a highly successful and long-lasting loyalty program.
Experiential rewards have the power to transform your loyalty program by creating deep emotional connections with your customers. While they don’t always have to come with a high price tag, the value of these rewards lies in their perceived worth. The magic happens in the details—convenience, uniqueness, packaging, and execution. It’s not about offering extravagant rewards like luxury trips, but about finding ways to deliver maximum value at a minimal cost. After all, perception is everything when it comes to creating memorable experiences.
For example, giving customers early access to products or exclusive sales doesn’t require significant investment—just a platform to manage access. To the customer, it signals exclusivity and status, making them feel valued. Similarly, smart partnerships with influencers or other brands can enhance your reward offerings without overextending your budget.
As businesses continue to innovate, experiential rewards are becoming more essential in loyalty programs. According to Antavo’s 2022 Global Customer Loyalty Report, 65.2% of companies with a loyalty program plan to incorporate experiential rewards in the near future. The key to success is offering personalised, memorable experiences that align with your customer’s interests and deepen their emotional connection to your brand.
Today’s loyalty programs are evolving. Customers now seek more than just discounts and cashback; they crave unique, emotional experiences. Experiential rewards, such as exclusive events, workshops, VIP services, and travel opportunities, are becoming the driving force behind customer loyalty. These rewards allow businesses to forge stronger relationships with their customers, helping them stand out in an increasingly competitive market.
Experiences create lasting memories, evoking positive emotions that discounts alone can’t match. When customers associate a brand with positive feelings, they’re more likely to stay loyal and advocate for it. By offering experiences that resonate with your brand and customers, you can foster authentic connections that transcend transactional exchanges, increasing customer lifetime value (CLV).
In a world flooded with similar products and services, offering experiential rewards can differentiate your brand. While discounts are helpful, they lack the long-term impact that a unique experience can provide. By offering exclusive experiences, you position your brand as more than just another rewards program, making your business memorable and distinct.
Happy customers are the best marketers. Experiential rewards are inherently shareable, encouraging customers to share their experiences on social media and with their friends and family. This type of word-of-mouth marketing is incredibly valuable, as people tend to trust personal recommendations more than traditional advertising.
Experiential rewards also serve as a powerful tool for gathering customer data. Events and personalised experiences give you the opportunity to collect zero- and first-party data, such as customer preferences and behaviour. This feedback allows you to refine your marketing strategy, improve your offerings, and create even more impactful rewards in the future.
Incorporating experiential rewards into your loyalty program isn’t just a trend—it’s a powerful way to enhance customer engagement, build brand loyalty, and differentiate your business in a crowded marketplace. By mastering the art of offering unique, personalised experiences, you’ll create a deeper connection with your customers and turn your loyalty program into a game-changer.
Experiential rewards are designed to offer unique and memorable experiences, rather than just products or points. They can transform a standard loyalty program into something more meaningful, fostering emotional connections and customer loyalty. Below are five key categories of experiential rewards that can elevate your program and engage your customers on a deeper level:
These rewards make loyalty members feel special, offering them exclusive perks that set them apart from the rest. Privilege-based rewards are all about providing access to experiences that create a sense of exclusivity. Some of the ways this can be done are-
Matchesfashion’s "The Curator" loyalty program has four tiers, offering an increasing list of privilege-driven rewards. The program gives members two to five (depending on their tier) surprise rewards each year, like private sales invitations and access to online styling services. It adds a personal touch with curated surprises that surprise and delight customers.
Creating experiences that bring members together is a fantastic way to build community and increase brand loyalty. These events foster a sense of belonging, making customers feel like part of something bigger. Instances of such events can be
REI Co-op, an American retail and outdoor recreation services corporation, provides experiential rewards like outdoor classes, day trips, and local community events. These events bring like-minded individuals together, making the brand a part of their lifestyle.
Some customers appreciate a more intimate, one-on-one experience with the brand. Offering personalised interactions can create lasting, impactful memories, such as
House of Diesel offers tiered rewards, with the lowest tier granting early access to sales. As customers progress through higher tiers, they gain access to experience-based benefits such as previews of upcoming collections and invitations to exclusive member events. For the most loyal members, the brand offers private shopping sessions with denim experts, providing a personalised, one-on-one experience that customers highly value, making them feel truly special.
Adventure-based rewards are ideal for customers who crave excitement and new experiences. These can range from tickets to unique events to thrilling adventures like-
BMW Inside Edge - The UK branch of international car manufacturing giant BMW has built a loyalty program purely for company car drivers. Once in the club, they have instant access to all benefits — no tiers or points required. The program offers exclusive perks like free coffee, movie rentals, and limited-edition raffles, including a chance to attend a PGA golf event. These high-profile, adventure-based rewards elevate the customer experience.
For top-tier loyalty members, luxury experiences are the ultimate reward. These high-end rewards require a significant level of commitment, making them highly desirable for your most dedicated customers. Some ways to provide such experiences include-
Marriott Bonvoy Moments offers luxury experiences such as Michelin-star dining experiences, concerts in Dubai, and stays at high-end villas in Malibu. These rewards require significant loyalty points, making them aspirational for the brand’s most devoted customers.
These categories showcase the variety of experiential rewards that can elevate your loyalty program and create more meaningful connections with your customers. By offering a mix of personalised, exclusive, and adventure-based rewards, you can create a loyalty program that not only drives engagement but also strengthens long-term customer loyalty.
Designing an effective experiential loyalty program can feel like a monumental task, but with the right approach, it can also be an incredibly rewarding one. The goal is to create a program that not only engages customers but also fosters deeper emotional connections, ensuring long-term loyalty. Here's a step-by-step guide to help you build a successful experiential reward system.
To kickstart your program, ask yourself the essential questions:
Who are your customers?
Why are they loyal?
When do they engage with your brand?
What experiences will truly resonate with them?
These questions will lay the foundation for your program, helping you identify the right experiences that align with both your customers' preferences and your brand’s values.
"As Laszlo Bock, former Google SVP of People Operations, once said, 'Experiential gifting is personal." To make your rewards truly impactful, tailor them to your customers' personas, relationships, and preferences. Think about what experiences would speak to your audience’s desires—whether it’s an exclusive product preview or a behind-the-scenes tour. Personalisation ensures that your rewards feel meaningful, which is essential for driving long-term engagement.
Once you have a list of ideas, it's time to define the scope and budget of your program. Consider these factors:
By addressing these questions early on, you can set realistic expectations and ensure that your program is financially sustainable.
Creating a great reward program is only half the battle. It’s crucial to effectively communicate the program to your audience. This is where marketing comes in. Your messaging should highlight the emotional appeal of the experiential rewards—show customers why these rewards are special and how they create lasting memories. The right marketing strategy ensures your program garners attention and drives participation.
Once your program is ready to launch, it's time to deliver the rewards to your recipients. To ensure a smooth experience, integrate your reward system with existing workflows and customer touchpoints. Whether it's through email, mobile apps, or in-store systems, seamless integration makes for timely delivery and keeps the program effective and enjoyable for participants.
The final step in building a successful experiential loyalty program is to analyse its performance. Regular evaluation allows you to track what's working and what isn’t. Monitoring customer engagement, redemption rates, and feedback will help you identify areas for improvement. A program that's continuously optimised based on data is far more likely to achieve long-term success.
Choosing the right partner to deliver experiential rewards is essential. Here’s what to look for:
1. Catalogue Variety: A strong rewards partner should offer a well-curated selection of unique experiences that cater to different tastes and preferences.
2. Personalisation: The ability to personalise experiences can make rewards even more memorable and impactful, ensuring customers feel valued.
3. Global Reach: If your customer base spans multiple regions, choose a partner that can handle global reward delivery with ease, including managing currency conversions.
4. Instant Redemption: Experiential rewards thrive on instant gratification. Opt for a partner that allows instant redemption, creating a sense of excitement and immediacy.
5. Seamless Integration: Look for a partner that integrates smoothly with your existing Customer Relationship Management (CRM), Human Resource Management System (HRMS), or other systems, making program management easier and more efficient.
6. General Data Protection Regulation (GDPR) Compliance: Ensure your partner follows data security and privacy regulations to build trust with customers.
7. Tax Benefits: Partnering with a reward provider who understands tax implications—especially for international programs—can help you stay compliant and avoid unnecessary hurdles.
8. Pay-as-You-Use: Choose a flexible payment model that lets you scale your program based on usage, reducing upfront costs and allowing you to better control your budget.
9. Analytics and Reporting: Having access to detailed reports and analytics allows you to monitor program performance and refine it over time.
While experiential rewards have become increasingly popular due to their ability to create memorable, emotional connections with customers, they come with some challenges for both businesses and customers alike. These potential drawbacks need to be carefully considered to ensure that the rewards program is as effective and engaging as possible.
Designing and delivering unique, high-quality experiences can be significantly more expensive than traditional rewards programs based on points or discounts. The costs involved in partnering with experience providers, managing logistics, and ensuring the quality of the experiences across different touchpoints can add up quickly. For businesses with tight budgets, this can be a serious consideration, particularly when trying to scale the program to reach a larger customer base.
Not every customer will find value in the same experience. While some customers may be thrilled by a luxury dinner or an exclusive backstage tour, others might not be as excited by those offerings. This makes it essential to deeply understand your customer segments and tailor experiences to match their interests. A reward program that does not resonate with a broad audience, risks alienating certain customer groups and failing to deliver maximum impact.
Delivering experiential rewards often involves a level of coordination that can be more complex than traditional programs. Scheduling conflicts, limited availability of certain experiences, and ensuring consistent quality across various partners or locations can create logistical hurdles. For example, ensuring that a customer's preferred experience is available during their desired timeframe may not always be possible, leading to frustration or dissatisfaction.
One of the most significant challenges businesses face with experiential rewards programs is quantifying the ROI. Unlike points-based programs, where financial metrics are clear and direct, the benefits of offering experiences—such as improved customer loyalty, increased brand perception, or emotional connections—can be difficult to measure accurately. While these intangible benefits are important, it’s challenging to attribute specific value to them, making it harder to justify the program’s cost.
While experiential rewards can be exciting, they may not always cater to every customer’s preference. The reward's value is entirely dependent on whether it aligns with a customer’s interests and lifestyle. If the program offers experiences that a customer doesn’t enjoy or find valuable, it can lead to disappointment and a feeling of wasted opportunity. This highlights the importance of offering diverse, personalised rewards to ensure broader appeal.
Some experiential rewards come with logistical requirements, such as travel, scheduling adjustments, or participation during specific times. Not all customers will have the flexibility or desire to rearrange their plans to accommodate these requirements. For example, if a customer wins an experience that takes place in another city, they may not be willing or able to take the trip. This inconvenience can undermine the enjoyment of the reward and limit the program's overall effectiveness.
The process of redeeming experiential rewards is often more complex than simply using points for a discount or product. There may be issues with availability, blackout dates, or long booking processes that create unnecessary hurdles for customers. These challenges can lead to frustration, especially if customers are unable to book their desired experiences within a reasonable time frame or encounter delays during the redemption process.
The perceived value of an experience is highly subjective and varies greatly from one individual to another. What excites one customer might not appeal to another, making it difficult to ensure satisfaction across a broad audience. For example, some customers may not value an exclusive spa day or concert ticket as much as they would a tech gadget or physical gift. This inherent uncertainty around value means that, unlike traditional rewards, experiential gifts can’t always guarantee the same level of satisfaction or excitement.
While experiential rewards can drive meaningful connections and stand out as unique incentives, both businesses and customers face challenges in making them successful. Despite these drawbacks, when executed thoughtfully and strategically, experiential rewards can still offer immense value by creating lasting, personalised experiences that foster stronger customer loyalty.
In today's world, experiences hold far more value than material possessions. People crave meaningful, memorable moments that resonate emotionally, making experiential rewards a powerful tool for businesses to stay relevant and foster deeper connections with their customers. While traditional rewards offer clear, visible value, experiential rewards offer an emotional depth that creates long-lasting impressions, driving customer loyalty in a way transactional rewards simply cannot.
However, because experiences are inherently personal, creating such a program requires a deep understanding of your customers and their preferences. This added complexity can be navigated successfully with the right partner who can help tailor experiences that truly resonate. The success of the program relies on a comprehensive strategy that aligns with customer desires and business goals.
As experiential rewards continue to grow in popularity, now is the time to act. While these rewards may still be considered a novelty, they possess the unique ability to capture attention and distinguish your brand. By embracing experiential rewards early on, you position your business as an innovative leader in loyalty programs, ahead of the competition.
So, take the leap now and harness the power of experiences before they become the norm. Connect with Thriwe to create a successful experiential loyalty program, offering a wide range of reward options tailored to your business needs.
