Why experiential rewards programs are on the rise

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Why experiential rewards programs are on the rise

In July, Tru Earth, a brand that sells laundry detergent sheets, launched an interactive loyalty program. As part of this, it held a 30-day “Plastic Free July” challenge and asked customers to post a photo of a time they used non-plastic products over plastic ones. In exchange, customers got points they could swap for discounts.

Tru Earth’s program is emblematic of a bigger shift occurring in the loyalty space. Customers are used to loyalty schemes like “buy nine coffees and get the 10th free” or “earn one point per dollar and redeem 100 points for $5 off.” Now, new types of programs are cropping up that are more focused on experiences, VIP invitations and emotional ties to a brand’s mission.

Unlike tit-for-tat transactional programs, these experiential rewards programs more closely intertwine with a brand’s value proposition or wider purpose — something marketing agencies say is key for resonating with millennials and Gen Z.

“In the retail space, the default rewards program is, ‘Get X amount of points you can spend back on my product,’” Lin Dai, the CEO and co-founder of loyalty technology company Superlogic, told Modern Retail. “Every consumer expects that. That’s where a lot of the forward-thinking brands are looking at, ‘How do we innovate and compete with our competitors? How does my product fit into a consumer’s lifestyle?’”

Rewarding for experiences

From getting outside to championing sustainability, brands are starting to reward customers for doing activities that line up with their brand values.

The surfing sportswear brand Rip Curl, for example, rewards customers with 200 points for every wave they catch while wearing their Search GPS Watch. “We’re so excited about being able to reward customers for what they love doing best — getting out and enjoying the waves,” Michael Scott, chief customer officer at Rip Curl, said in a case study of the program.

Meanwhile, Mr. Lid, a competitor to Tupperware, is giving customers 100 points for adding the product to their Halloween costumes. “We continue to seek out… the most fun and wildly original ideas for how to use and reuse and reuse and reuse Mr. Lid,” Pall Musaev, CEO of Mr. Lid, told Modern Retail.

As demand for experiential rewards rises, service providers are popping up to help brands get into this space. One is a company called Rediem, which allows brands to build rewards programs into their websites. Loyalty members get access to a dashboard that gives them mission-aligned challenges they can complete for points. To show that they properly completed the challenges, they upload photos to a community forum visible to other members. Members can cash in points for discounts, merchandise or donations to community-based partners.

“We felt like everything that existed in the loyalty space was very transactional — there was no way for you to build a community,” Sarah Ganzenmuller, founder and CEO of Rediem, told Modern Retail. “Your most loyal customers are going to be the most active in your community and the ones advocating for you to engage with them in ways that are in line with [your] mission. It made sense for us to create this platform that enables brands to do that in a way that scales.”

Rediem works with 20 brands across food, beauty and other verticals. The company was in beta last year but formally launched this summer. Rediem uses a scarcity model in which it brings on five new brands a month. It has a waitlist of some 500 brands, including Sun Bum, Olipop and Thousand Fell, according to its website.

Tru Earth started using Rediem in July for its “Plastic Free July” challenge. One of Tru Earth’s other challenges is to “wash your clothes on cold,” which is more energy-efficient than using hot water. Tru Earth is also giving members points for posting photos of their thrifted or re-worn Halloween costumes this month.

Meanwhile, period products brand Viv uses Rediem to hold challenges like “recycle your Viv packaging.” It’s also hosted the challenge “take a rest day” to combat commercials showing people on their periods as being overly active. In November, Viv will give out points to members who post their “I voted” stickers to “get more into the mission and activism side,” Katie Diasti, founder of Viv, told Modern Retail.

Both Tru Earth and Viv told Modern Retail that they’ve noticed an increase in average order value (AOV) from their rewards members. The first two months after launch, Tru Earth’s AOV for members went up $15, Kate Huibers, head of ESG at Tru Earth, told Modern Retail. Viv saw its repeat purchase rate increase by 45% in the months following its launch with Rediem.

“I was shocked at the level of engagement we had,” Diasti said. “People are coming back and doing more activities.”

Experiences as rewards

On the flip side, some brands are building programs that offer experiences as rewards.

Francesca’s, for instance, held an in-person event last year with loyalty members, influencers and store associates in Miami, Florida. The day involved giveaways and a “Bag Bar” in which people could pick out their favorite Francesca’s handbag for free. In April 2023, the brand told Modern Retail it planned to hold additional specialized events “in buckets” throughout the year, such as back-to-school and holiday events.

Sephora is also doing more with loyalty events. In August, Sephora put on its first-ever Rouge Celebration Event — four days of in-store and online activations for the retailer’s top spenders.  Participants snagged exclusive rewards from brands such as Tatcha and Kerastase, attended brands’ online masterclasses and were the first to shop for new products from companies including Drybar and Givenchy. Sephora also brought 30 brands into 13 stores to hold product demonstrations and giveaways. 

Meanwhile, Vuori offers community events in local markets year-round. It’s banking on experiential marketing as a “core way… [to] connect with newcomers and brand loyalists alike,” Vuori chief marketing officer Karen Riley-Grant told Modern Retail.

While many of Vuori’s events are open to the public, some are exclusive to customers. On September 28, Vuori held an activation to mark new styles of its DreamKnit fabric and hosted a few movement classes throughout the day specifically for New York City-based customers and Vuori ambassadors. Every session filled up in “less than 24 hours,” the brand told Modern Retail.

Events like these are a great way to foster a sense of community within a brand, said Charlie Wade, global head of experiential and partnerships at the marketing agency VML. They also tend to lead to a trove of user-generated content, which the brands can then re-share on social media. “Social media has a really big currency to it,” he said.

Ultimately, experiential rewards programs are great at building brand affinity, Wade said. “You’ve got to try and find ways to engage with the consumer and get them back in,” he explained. “No one wants to just be offering discounts the whole time. Everyone knows it’s a part of retail, but there’s a bigger opportunity to build that brand love.”

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