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Supercharge Your Loyalty Program with Product-Based Point Redemption

Rewards programs are built around the concept of offering value to customers in exchange for brand loyalty:  Stores offer points to customers who make purchases or take other meaningful actions, and offer discounts to their products as an incentive to keep their customers coming back for more.

The concept is straightforward, but like most rewards programs, this example takes an overly narrow view of what customers define as “value”. Sure, offering discounts on your products can be a powerful motivator to increase your average customer lifetime value, but programs that define value specifically as discount coupons are handicapping their potential when compared to a more well-rounded loyalty program.

Every shopper makes decisions and perceives value differently, especially when it comes to what they’re able to earn in exchange for the points they accumulate from your program. Many of your customers might be content to receive a discount on their next purchase, but what about the customer who isn’t yet sold on your brand?

Think about it from a new customer’s perspective. They’ve just made their first purchase with your store and earned a healthy share of points. However, they’ve used other products similar to yours in the past and aren’t yet convinced that your products are the best option.

Screen Shot 2017-09-07 at 7.06.22 PM

Image via ElectroThreads

Is a discount on a future purchase that they are still unsure about making what they’re looking for? For many customers, the answer may be “yes”. But what about a free product that’s another chance to convince this shopper that your brand is the right long-term solution for them? Jackpot.

In this scenario and many others, offering your customers the opportunity to exchange their points for free products is not only a powerful incentive, but also a versatile tool that you can use to achieve longer-lasting, more profitable customer relationships. With Swell, you can now seamlessly and intelligently implement this high-impact strategy for your business.

The “Old” Solutions

The ability to redeem points for products directly is a feature that many ecommerce businesses have long been interested in implementing for their customers. Unfortunately, we found that alternative mechanisms tend to suffer from two core issues.

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Image via Modells

Issue 1: User Experience

The most common method we’ve seen for merchants to be able to offer free products is by creating a discount code specific to a particular free product. With this method, the customer redeems points outside of the checkout window and receives a product-specific code. However, from there, the customer then has to find and add the product to their cart, and then remember to copy the code in as well. 

Clearly this user-experience is excessively complicated for the customer. More importantly, the multi-step process can also put conversions in jeopardy. With time, coupon redemption rates inevitably fall below expectations, and customers begin contacting the store’s support line for help figuring out how to use their coupons. Ultimately, the benefits the store should have been enjoying from their points for products initiative are negated.

Issue 2: Inventory

We’ve also had merchants who have attempted to work around the user experience issue by creating a variant of the product which is redeemable for points which costs $0, and can only be added to the cart via the rewards program. The good news in this case is that the free product gets added to the cart directly; no hunting for the right product to add to the cart!

Here’s the problem with that one though:  the merchant has to carry an entirely separate line of inventory for the $0 variant, which can be a massive headache when it comes to tracking and planning.

Moreover, if the customer changes their mind and decides not to checkout after they’ve already redeemed their points, it’s too late — because the $0 variant is giving the customer a free product right away, points have to get deducted immediately. That means that if a customer decides to abandon their cart,  they will no longer have access to their points and will be even more likely to contact a store’s support line.

Image via BigCommerce

Image via BigCommerce

We’re incredibly excited to announce that we’ve found a way to circumvent these issues which have historically plagued the industry! The Swell solution gives merchants the benefits of an intelligently designed points-for-products program, along with an optimized inventory management process and results-driven customer experience.

Our Solution

Our answer leverages the inherent power of your e-commerce platform to eliminate unnecessary steps for both the merchant and the consumer. Stores no longer need to track “ghost” free items, and shoppers won’t have to jump through hoops to redeem their discounts. Now, our system identifies when customers have chosen to redeem points for a product and automatically adds that product to their cart with the applied discount — better yet, it draws from existing inventory, which means there’s no longer a need to manage separate “rewards inventory”.

We believe there are two great ways in which our streamlined process can be deployed: on the product page directly (so that any product can be seamlessly redeemed for points), or as part of a completely curated set of products. Both can supercharge an incentive marketing strategy!

Image via SokoGlam

Image via SokoGlam

Use Case 1: Allowing Customers to Buy Any Products for Points. Seamlessly.

A flexible deployment strategy is crucial to building a program that customers engage with regularly. Offering redemption options through a template in one area of the site can be effective, but is sometimes difficult for all customers to easily find and use.

In a previous blog post, we discussed “I want to buy” moments, or fleeting moments when customers are most likely to make a purchase on impulse. They come and go rapidly but account for a sizable percentage of all ecommerce purchases. In order to effectively leverage these “I want to buy” moments to optimize your coupon strategy, you need your coupons to be readily available as “activators” whenever these moments come along, not just in your rewards modal.

Two opportunities to capitalize on these moments at a high rate occur on product pages and the checkout page.

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Image via Appirio

When customers are browsing through your product listings and one particular product stands out to them, they are experiencing an brief “I want to buy” moment. Once they load the page, you want it to be as easy as possible for this customer to move on to purchase that item. Adding a purchase with points option is a great way to encourage customers who have already earned points to redeem them and initiate a purchase-friendly mindset.

The checkout page is the most powerful location to deploy your program for several reasons. By moving the action of redeeming points as late as possible in the checkout process, you minimize the risk of cart abandonment. Because every purchase goes through the checkout page, customers will always remember to engage with your program, maximizing overall coupon utilization. 

Swell client Appirio maxed out the concept of flexible deployment to create a program that is uniquely integrated into every product in their store. 

Image via Appirio

Image via Appirio

Each product on their website is assigned a particular point value and can be purchased using accrued points. Appirio worked with Swell’s experienced incentive marketing team to determine the right point distribution to maximize both their profit margins and their customer retention rate. 

The “purchase with points” option on every product page helps create a high volume of “I want to buy” moments, which they can then focus on converting. Their program also facilitates high levels of engagement because of its deep integration with the brand’s identity.

Case 2: Point Redemption with Careful Product Curation

Content curation is a powerful and often overlooked benefit of offering products in exchange for points. Carefully selecting which products you allow customers to redeem for points allows you to control your site messaging and, more importantly, promote products that will in turn lead to growth for your store.

So how does content curation work with Swell in this context? We recommend two primary high-return methodologies for effective product selection.

Promote “Gateway” Products:

A gateway product is a product that typically is purchased by high-performing customers. For example, for a certain beauty brand, customers who have the highest lifetime value tend to purchase their face cream, while those who make fewer than 3 purchases in their lifetime do not. In this case, the face cream functions as a “gateway” product that deepens shoppers commitment to the brand.

The beauty brand would want to encourage customers as much as possible to purchase their gateway product as a way to quickly increase their average customer lifetime value. Offering the face cream product for free in exchange for points is a highly effective way to achieve this.

Leverage Exclusivity:

Exclusivity is a powerful driver of human behavior. People want what they can’t have and scarcity is a proven economic driver of value. Simply put, when an item is exclusively available to be purchased with points, it inherently becomes more valuable.

The more value your customers think they’re getting value from your program, the more likely they are to continue to participate in it. That means exclusive products equals higher perceived value, which equals higher purchase frequency and ultimately higher brand loyalty.

Image via SokoGlam

Image via SokoGlam

Another Swell user, Soko Glam, utilized curation to offer select products to their customers. Ultimately they chose to offer 4 carefully selected products. Rather than using exclusivity to increase perceived value, Soko Glam offered gateway products that are otherwise available on their website.

Because they sell so many different products, without their rewards page these value-driving gateway products can be difficult to locate. Their program functions as a spotlight to help increase overall customer lifetime value.


Rewards programs that offer points for discounts are important but, at times, miss shoppers at certain stages of the customer lifecycle. Points for products programs meanwhile, are highly versatile and can serve similarly as a standalone program or as a complement to a more balanced and comprehensive rewards program. When implemented correctly, points for products programs offer various benefits to your business including higher retention rates, conversion rates, and average customer lifetime value.

To learn how Swell’s team can get this implemented on your website as soon as possible, reach out to us at team@swellrewards.com.

 

Nikhil Naidu • September 8, 2017


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