Over the past ten years, we have worked with 1,000s of malls and tenants, and we have gained a lot of experience and knowledge of what types of loyalty schemes are the most effective. For us, the answer is simple – points-based loyalty programs with ‘Earn and Burn’ techniques.
Our data shows customer loyalty programs based on Earn and Burn generate 3.5 times more Transactions per Member yearly compared to other loyalty programs. As a result, businesses that adopt an Earn and Burn solution generate an average of 51% uplift in the number of transactions.
Unsure what Earn and Burn is? In this article, we take you through the basics and psychological drivers that make this type of loyalty so successful for retail destinations.
Spend to Save
Earn and Burn is a customer loyalty program that rewards spend and repeat buying by incentivizing customers to gather points. When a member shops, they earn points with each transaction which can be saved and used towards future purchases or for experiential rewards such as free VIP lounge access or a free hands-free shopping experience.
The simplest way to adopt this tool is where points earned equal the respective value in local currency. Variations of the mechanics include points to buy vouchers/offers or a mix of the above. Our research reveals adopting this save-to-redeem technique results in 10% higher database growth than other loyalty mechanics.
Psychological drivers
So, what is it that makes points programs such as Earn and Burn perform so well compared to other loyalty propositions? Spend to save point programs resonate more with people’s psychology, provoking human tendencies to gather and finish what we have started, also called the ‘Zeigarnik Effect.’
Framing points as a currency results in loyalty members collecting points the same way as they collect actual money. When customers join the loyalty program and complete their first transaction, they are driven to continue shopping to collect more points. These points can then be used towards future purchases or to redeem an exclusive experience they feel they have earned.
To encourage this trend becomes a habit, it’s good to start members with an initial points balance on sign-up. That reinforces the above behaviors and also switches on the need to reciprocate. Customers feel more valued and make more transactions. This results in increased spend, activity, and customer satisfaction. The proof is in the numbers: on average active members in Earn and Burn loyalty programs makeup 38.6% of the entire database. For other types of customer loyalty, it’s only 19.8%.
Identifying your shoppers through earn-and-burn loyalty programs allows you to layer over the program with other types of customer loyalty. For example, combine it with surprise and delight offers or more experiential treats to appeal to their more emotional side.
Economy proof
When patrons redeem their points during a transaction, they are 38% more likely to spend more than they usually did before the transaction where they redeemed points. This means customers may use their points to fund expensive purchases or as a treat.
In the shifting market, where customers may feel increasingly guilty when making big, luxury purchases, using the points can help to ease the remorse associated with that purchase. Moreover, by allowing the customer to earn points on the same purchase, the feeling becomes outweighed by the satisfaction from accumulating new points. Our analysis shows that 54% of members spend more on their next transaction after redeeming points.
Experiential rewards allow people to indulge in an extra service or some VIP treatment without the associated cost. This gives customers experiences they would not usually be able to afford or access. Once a customer has tasted the VIP treatment, they are more likely to pay to upgrade their experience in the future.
Burn – a key to customer loyalty
Redemption levels are a common concern when implementing spend-to-save programs. Providers worry that too many points will accumulate and see these as a liability. What we’ve noticed at Coniq is to the contrary. In fact, 38% of Earn and Burn program members redeem their points within a month of earning them.
The key to a strong program is encouraging redemption and expiring points. Both practices increase spend and the number of visits. Customers who visit within a month of a burn spend an average of 25% more on their next earn transaction.
Active customers who redeem before points expire remain loyal and continue collecting their points after the cycle restarts. Similarly, it’s rare for customers who allow their points to expire to give up on the loyalty program. Therefore this proves how strong the customer’s emotional connection and brand loyalty become.
Time-proof
The instantaneous abilities of mobile apps can increase customer spend within points-based loyalty programs. Allowing members to access their points balance using mobile apps makes them feel instantly gratified and increases customer satisfaction. For instance, at least 60% of active members of Earn and Burn programs download a mobile app.
Through app notifications, extra points can be awarded and pushed to the customer’s device. The notifications function as nudges to reinforce desirable behavior in shoppers. App notifications can also capture customer attention while they are shopping, encouraging and resulting in longer dwell times and purchases.
Mobile apps are a great way to engage customers with the earn and Burn program.
Using points as rewards removes the need for many discounts while simultaneously building value in the loyalty program. Points-based redemption is recession-proof and delivers outstanding value to customers and brands alike.
Our data shows that Earn and Burn customer loyalty programs generate a 10% higher Average Transaction Value for the program members than other loyalty mechanics.
For instance, a loyalty program with 500,000 members and an ATV of £60 could generate an uplift of £6 per member. In this instance, adopting an Earn and Burn loyalty program brings an additional £3,000,000 to your center. These redemption rates alone confirm how effective earn and burn programs are.
Are you interested in loyalty?
Check out Four steps to designing a winning customer journey for your loyalty program or 10 Tips to Create a World-Class Mall Loyalty Program to learn more!
