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Why Perceived Relationship Investment is Your Key to a Successful Rewards Program for the Holidays


Why Perceived Relationship Investment is Your Key to a Successful Rewards Program for the Holidays

It’s no surprise to hear that the holiday season is strongly associated with generosity. For most people, its a time for gift-giving, volunteering, and general altruism. For people in the ecommerce world, its also time for increased traffic, orders, and profits.

While processing the increase in activity, one thing many retail businesses overlook is that they can actually partake in the gift-giving and kindness as well. In fact, doing so typically benefits not only customers, but also the brand itself. Getting your business properly involved in the holiday season can help increase conversions as well as your overall performance.

Why You Benefit From Being a "Giver" During the Holiday Season

Why is the act of giving so powerful?

In this context, it may be because of the role that generosity plays in strengthening the all-important customer-brand relationship. In fact, A 2001 study proved this correlation by delving into a now well-established psychological principle known as "perceived relationship investment."

Perceived relationship investment is defined as "a consumer's perception of the extent to which a retailer devotes resources, efforts, and attention aimed at maintaining or enhancing relationships with regular customers". In other words, "how hard do your customers think you are working to treat them to an optimal overall experience with your business". This is where two popular sayings come into play: "perception is reality", and "quid pro quo".

The lasting impression your customers will have of your business is based on their perception of how much you are investing into your relationship with them. Based on whatever they decide you've invested, they'll adopt the quid pro quo mentality and give you equivalent loyalty in exchange.

The holidays are a particularly good time to reinforce your relationships with shoppers by demonstrating customer appreciation in tangible ways. Launching a rewards program or modifying your existing rewards program for the holidays is a logical way to do this, since it's a program that inherently involves giving value back to your most loyal customers (thus boosting this giving-back mentality when you're looking to do so).

Even further, most shoppers believe loyalty programs to be highly valuable, especially during the holiday season. In fact, 69% of holiday shoppers indicated that they would be more likely to shop at a retailer who offers rewards points.

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5 Ways to be a "Giver" For Your Customers

All of this makes the holidays a perfect time to give your rewards program a short-term revamp. Here are some ways that you can modify your rewards program for the holidays to suit the season and improve your perceived relationship investment by more fully partaking in the spirit of giving:

  • Multiply the points that your customers earn during the holidays. This sends an important message to your customers. It says that you care about making your products more affordable and giving your customers more value at a time when they need to make purchases. Equally importantly, it helps reinvigorate your incentives. A common issue many rewards programs develop is what we call "stale incentives". After customer get accustomed to a certain set of rewards, they become less likely to view them as valuable. This makes them less likely to engage with your program and ultimately less likely to make repeat purchases.
    1. Real-world example: Kroger offers four times the points on gift card purchases during the holiday season.  You can also simply multiply the value of all points earned during this time.
  • Reward additional actions.  Not only does this help with "stale incentives" and program stagnation, it is a great way to both give customers value and set up incentives that will drive sales throughout the holiday season. For instance, through the months of November and December, you can reward customers when they share a your holiday product guide on social media, or reward customers who sign up to receive exclusive updates on holiday product releases.
  • Gift free reward points to all customers. This strategy has a two-fold benefit. Foremost is the explicit investment your shoppers see you are making in your relationship with them. The more subtle, but likely more impactful benefit is potentially reactivating customers who haven't shopped with your store for an extended period of time. In today's fast moving ecommerce world, it can be easy for shoppers to forget about a brand that they once purchased from on a regular basis. Giving these customers free points, gives them value that the risk-averse consumer will be weary about losing. A simple email campaign can be used to remind these customers that they now have value stored in their account, which will cause them to revisit your website and evaluate your offer.
  • Offer limited-edition, festive rewards.  These can include holiday-themed gear or simply gift cards that feature seasonal visuals. Exclusivity is amongst the most powerful drivers of perceived value. Offering customers products that they can only get during the holidays as rewards shows additional effort from your brand to give them value for the holiday season.
  • Offer members of your VIP program exclusive access to holiday discounts or opportunities. As you know by now, the name of the game during the holidays is perceived relationship investment. Treating your high-performing customers well is crucial to maintaining their loyalty in the long-term. If those valuable customers believe their loyalty to your brand is not being appropriately reciprocated, they are much more likely to "churn".
    • Real-world example: in an extravagant take on this concept, Nordstrom hosts annual private holiday shopping parties for their most loyal reward card holders.  These parties include complimentary food and drink, plus 10 reward points granted for every dollar in purchases made at the event (which ultimately equates to a generous 10% back).

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Because many of these features are either festive or quite novel, they’ll also boost customer delight and your loyalty program's engagement in more direct ways. Any specific association with the holidays or gifted value tends to generate feelings of warmth, which can quickly become associated with your brand and your store’s shopping experience.

Even further, doing things like doubling earned reward points and rewarding log-in do more than just give back to shoppers -- they actually boost incentive power and encourage program engagement, respectively.

Effectively Executing Your Holiday Strategy

Well-executed implementation is crucial to deriving as much profit as possible from your revamped holiday rewards program, and promotional visibility and timing are key contributors to success.

Promotional Visibility

It is important to publicize these new features well in order to strengthen your customer relationships, especially because the holidays are highly time-sensitive (meaning that customers who don’t quickly hear about season-specific program offers will likely miss out).

Image via Cairn

Image via Cairn

If nobody knows about your new products, nobody will buy them, and the same goes for your new holiday rewards promotions. If shoppers are unaware of your newly-introduced promotions, then these promotions aren’t working to boost your overall customer engagement. While your website and social media accounts are intuitive places to turn to in order to communicate program revamps, don’t forget that direct emails can go a long way as well. Many effective holiday email campaigns start by conveying a longer message of customer appreciation first and foremost, followed up with communications of any reward program-related updates as tokens of gratitude).


Finally, it’s important to consider timing. Many holiday reward features go live in early November -- safely before Thanksgiving -- and wrap up before either Christmas or New Year’s.  Depending on the particular promotion being run, discounts may be offered for as long as two months, or as short as a few hours.

Regardless of their length, as most brands have become painfully aware, it’s critical that rollout for your holiday plans begins just before November -- and reward program updates are no exception. Launch your holiday incentives to early, and you risk them becoming "stale" and stagnant. Promote them too late, and you'll make it harder for all of your customers to learn about them in time. We suggest that you begin rolling out your holiday promotions and campaigns early in November to maximize both awareness and engagement.

Logistical details aside, the ultimate takeaway is this: if you find yourself wondering how you can give without hurting your bottom line this holiday season, fear not -- maximize your perceived relationship investment through your loyalty program to create a solution that rewards both customers and your brand.

Talia Patapoutian

Talia Patapoutian

Content Creator at Swell


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