Rewards Marketing for Friends and Customers – an old model in a new world of mobile and social
Rewards marketing is one of the oldest games in the business, from giving people a simple report or video for an email, to building points and leaderboards that set them apart.
In the new media world developing all around us, rewards are becoming a way to incentivize action – to gain virtual currency by redeeming offers and gaining an edge. It all revolves around the concept of gaming mechanics, which have taken the old model of game development and integrated into into this social world.
As a follow up to this post, let me share a simple view of Rewards as they are evolving to motivate friends and customers.
Before we begin, a caution – when the reward is more important than the activity you want the person to do, it becomes a bribe. People don’t respect bribes, they will redeem the reward and get it, but they don’t come back because it’s all about the short term reward.
Groupon is a great example of this, drawing a coup0n-like audience that are fickle, loyal to the deal, and not repeat buyers. The rewards approach I’m sharing tries to limit this by giving a reward AND an action that means something to the person doing it, and is remembered.
Let’s see what people are doing to rewards in this context, moving it beyond the appeal of a coupon and into repeat behavior.
Being Remembered is Key: The Power of Rewards in Action
- SCVNGR is a savvy marketing and games company that is adding a twist to the Groupon model with LevelUp; they want to profit from the second and third purchase a person makes. Most rewards based on savings have so much focus on the first purchase, and it’s not always good for local businesses to give multiple discounts. So the reward behavior here is based on longer term buying behavior.
- My take; a great idea, having 3 levels of participation, in theory; in application, this is still the coupon world and unless LevelUp becomes the trusted brand for delivering 2 and 3 time buyers, it’s not likely to fly. Those kinds of customers are the toughest to create, a lower percentage, so the reward model incentivizing repeat behavior bears watching; like a game, it has different levels. Will people play the game is the true test, because saving money doesn’t build loyalty, a good business delivering good service does.
- TreatFeed is another competitor, focusing on word of mouth referrals to other people online. When you or someone else makes a purchase, you earn points, and points can be turned into rewards. The focus here is the development of virtual currency and the viral effect, inviting other people to come and participate – which means buying again.
- The challenge? Will people use this to spam their friends and invite the masses to participate? Of course, and the key is whether this will turn into sales. Reminds me of the old dotcom fiasco, AllAdvantage and its “Get Paid to Surf the Net” pitch. While the business model of Treatfeed is much better, leveraging affiliate programs and actual purchases, the encouragement for people to refer often appeals to non-buyers.
- The incentive here is to build your network, which means you make money, yet to do that the audience has to find people who will actually buy stuff, and Treatfeed has to provide the right amount and variety of deals to encourage that buying behavior.
Rewards, after all, are about buying behaviors, or they burn out. It’s the trickiest part of the branding to revenue game, putting up enough incentive for people to act, without making the incentive the reason they act. Repeat purchases will be the key for both of these companies.
And for you? The key is to look at how rewards are being used in a social context, what the overall objective is of your business, and how you can integrate some form of reward for repeat buying behavior. Maybe it’s discounts, maybe it’s points, and the choice is clear; do you focus on rewarding a purchase with increased value – like adding extra bonuses to a purchase in forms of ebooks, videos, or savings down the road – or rewarding viral activity.
Either way, to be remembered you have to integrate the reward into the overall branding of the company, In this scenario, I can see Treatfeed as building the brand around viral activity and people remembering it. LevelUp has a great idea but a tough path, and the levels that are being played have to provide a quantity and quality of reward to keep the user playing, and most importantly, paying.
What are you doing to put rewards into your social media efforts – and what have you seen that works or doesn’t?