Now + New + Next: Rethinking Rewards in the New Engagement Economy
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This document discusses rethinking rewards programs in the new engagement economy. It notes that while over 7 loyalty programs, only 16% of consumers redeem rewards. It also discusses how consumers have changed with new generations and more digital devices. Reward programs need to leverage big data from social media and behaviors to provide personalized experiences. Both traditional tangible rewards and virtual rewards have upside and downsides. Virtual rewards have low costs but also low intrinsic value unless linked to intrinsic behaviors. The document provides examples of best uses for virtual rewards and an example of a program that saw participation and engagement double using these strategies.
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Now + New + Next: Rethinking Rewards in the New Engagement Economy
- 1. Now + New + Next Rethinking “Rewards” in the New Engagement Economy December 10, 2013 Proprietary and Confidential © 2011 Maritz 1
- 2. Mary Luckey Director Reward Strategy Barry Kirk Vice President Loyalty Strategy Proprietary and Confidential © 2011 Maritz 2
- 3. I am: •Currently running a rewards program. •Planning to launch a program soon. •Evaluating whether to launch a program. Proprietary and Confidential © 2011 Maritz 3
- 4. Proprietary and Confidential © 2011 Maritz 4
- 5. 5
- 6. US consumers are enrolled in 7.4 loyalty programs. Maritz Loyalty Marketing 2013 US Loyalty Report Proprietary and Confidential © 2011 Maritz 6
- 7. Only 16 % of consumers redeem for rewards in US loyalty programs Forrester 2013 State of Loyalty Programs Proprietary and Confidential © 2011 Maritz 7
- 8. The engagement cliff Initial Awareness Participation & Enrollment Participation, but with lagging engagement levels Disengagement Time Proprietary and Confidential © 2011 Maritz
- 9. The Four-Drive Model of Motivation Driven to acquire stuff, status, resources Acquire Bond Driven to engage, cooperate,“fit in” to the community CHOICE Driven to defend status, stuff, ideas and relationships Defend Create Driven to “create” better self, team, organization, world Based on the work of Paul Lawrence and Nitin Nohria at Harvard Business School ©2013 The Maritz Institute. All rights reserved. 9
- 11. Traditional rewards Proprietary and Confidential © 2011 Maritz 11
- 12. Proprietary and Confidential © 2011 Maritz 12
- 13. Proprietary and Confidential © 2011 Maritz 13
- 14. Proprietary and Confidential © 2011 Maritz 14
- 15. Traditional reward strategy Proprietary and Confidential © 2011 Maritz 15
- 16. Today we have an avalanche of data … Proprietary and Confidential © 2011 Maritz
- 17. People in reward programs have changed • New Generations – By 2015, the oldest Millennials (born after ‘77) will be 38 years old 1 • More Digital Devices – Average U.S. household has 5 digital devices, and some have 15 or more2 • Soon, More Devices than People! – Number of mobile-connected devices will soon exceed the world’s population3 1 Pew Research Center’s Internet and American Life Report 2 Bloomberg Tech Blog 3 Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update Proprietary and Confidential © 2011 Maritz 17
- 18. People’s expectations have changed, too “I expect personalized experiences in all my online environments.” “I’m a 20-something who likes music downloads and designer handbags … so don’t show me housewares, sporting goods, and lawn care.” “I want access to my rewards site on my smartphone, tablet or laptop – depending on where I am and what I’m doing.” Proprietary and Confidential © 2011 Maritz 18
- 19. Consumers are in the drivers seat Proprietary and Confidential © 2011 Maritz 19
- 20. Social intelligence is big data Sentiment Volume Velocity Emotion Proprietary and Confidential © 2011 Maritz 20
- 21. Maritz social intelligence study : affluent women Volume Affluent Women – Conversations Emotion Proprietary and Confidential © 2011 Maritz 21
- 22. Proprietary and Confidential © 2011 Maritz 22
- 23. Behavioral Intelligence is also big data Proprietary and Confidential © 2011 Maritz 23
- 24. We are: •Currently using big data in our reward strategy. •Evaluating how to use big data in our reward strategy. •What’s big data? Proprietary and Confidential © 2011 Maritz 24
- 25. Future strategy for traditional rewards Behavioral Intelligence Social Intelligence Proprietary and Confidential © 2011 Maritz
- 27. Virtual rewards are non-physical goods that exist online and are earned by participants for engagement and achievement. • Likes • Badges • Shares • Trophies/Achievements • Comments • Virtual “goods” • Levels • Points 27
- 28. We are: •Currently using virtual rewards in our rewards mix. •Evaluating whether to integrate virtual rewards into our rewards mix. •Not planning to include virtual rewards in our program. Proprietary and Confidential © 2011 Maritz 28
- 29. Proprietary and Confidential © 2011 Maritz
- 30. Tran actions s Proprietary and Confidential © 2011 Maritz
- 31. Inter actions Proprietary and Confidential © 2011 Maritz
- 32. The upside of virtual rewards: • Low cost to produce • Low cost to store • Inexhaustible supply • Can attach to any behavior • Consumers and employees like them. A lot. Proprietary and Confidential © 2011 Maritz 32
- 33. Engaging in a behavior for its own value. Intrinsic Extrinsic MOTIVATION Engaging for the promise of an attached reward. Proprietary and Confidential © 2011 Maritz 33
- 34. The downside: Virtual rewards have low and exceedingly fleeting extrinsic value. Instead, link them to behaviors with intrinsic motivators. 34
- 35. AWARENESS D is ruptio D isruptio n!! n Status Status Quo Quo - COMMITMENT INFLUENCE Habit Ritual Ritual Social Interaction – Autonomy – Mastery Effort – Risk - Reward + Proprietary and Confidential © 2011 Maritz
- 36. 5 best uses for virtual rewards: 1. To show progress toward a goal 2. To acknowledge mastery 3. To indicate social connection/status 4. To enable online personalization 5. As a proxy for a tangible reward Proprietary and Confidential © 2011 Maritz 36
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- 39. Results: 2X 115 % EE+ Participation doubled over previous year Increase in overall recognitions submitted Four of 7 engagement outcomes are up significantly Proprietary and Confidential © 2011 Maritz 39
- 41. Questions? Mary Luckey Director Reward Strategy Barry Kirk Vice President Loyalty Strategy Proprietary and Confidential © 2011 Maritz 41
- 42. Thank You Proprietary and Confidential © 2011 Maritz 42
Notas del editor
- Why worry about rewards and engagement? 3% of Members enrolled in loyalty programs stopped actively participating in at least one loyalty program in the past year. This number is disconcerting for program operators, yet of even greater concern is that only 7% of these defecting customers actively defect – meaning formally request leaving a program.
- The challenge is, those traditional models having started to show some signs of fatigue. We see this already in many loyalty programs, evidenced by this very common engagement curve. - high enrollment, followed by a steep drop off in engagement for many members (60% or more)
- Traditional Awards can be defined as the tangible awards in a consumer loyalty program for which people redeem. After accumulating a number of points they get to spend it on REAL stuff – like merchandise and gift cards For decades now, the methodology for determining what the actual awards are in a program been very tactical and not very strategic – the tangible awards have actually been almost an afterthought.
- Basically award strategy has pretty much worked like this.. someone - picks out a limited selection of merchandise, retail and travel gift cards, Over time additional awards are added like online travel then a competitor adds charitable awards – so you do. Then you see magazines in another program, so you add that. And before you know it…. You have
- something like this! Kind of a HODGEPOGE of rewards. Most programs just keep throwing new awards at consumers because they don’t really know what else to do And you usually the consumers just get confused. They can’t find things, it’s tough to navigate
- Some tangible award collections get a little more strategic … You might have a different selection for different segments and it would work like this: you think about the people in a segment – let’s say high net worth or “premier” customers. And try to envision what they want. Burberry and Coach bags, and high end trip to places like Africa. You source, and fulfill the awards But you never real know if you’ve hit the mark except for the occasional survey Well, guess what- the world has changed (but our awards strategy has not!) What if you could actually understand what your customers want? We used to “guess” what people wanted beccause we didn’t have enough data… Guess what we have now?
- You got it ! There’s this thing called Big Data – maybe you’ve heard of it? The amount of data out there is staggering! 750 million people facebook users post 90 pieces of content per month There are over 140 million tweets per day And my favorite – there are more videos posted on You Tube in 60 days then there is content that network television created in 60 YEARS. It’s mind boggling!
- And people have changed too.
- People’s expectations have changed too. People wanted personalized experiences They want relevant awards - don’t show me stuff I don’t want!“ They also want to have a great shopping experience whether they are on their phone, tablet or laptop. “ Let’s face it…
- consumers are in the driver’s seat – they want what they want, when they want it! And they want their shopping and buying experience to be just as good on their reward programs as it is on any online retail site. So, how can we take all this big data and what we know about consumers and make the tangible award experience more strategic and targeted.? Well, we can start by listening to what consumers are saying.
- Yes, people are talking online all day about what they want and don’t want. We just have to listen. We’re working with one of Maritz’ research companies – Evolve24 to find out what people really want. Evolve is social media intelligence company. They not only monitor conversations and other digital content, but they have patent pending processes that also captures sentiment – are conversations positive or negative Volume and velocity – how much is being said, and how fast is it spreading And emotion – how strongly do people feel about what they’re talking about We talked earlier about important emotions are in human beings. What we’ve found out that the online conversations that have very little emotion aren’t very important. What you need to pay attention to are conversations that have very strong emotions tied to them You need to pay attention to things people LOVE and things people HATE. Let’s go back to the high net work segment we were talking about before.
- Show lifestyle shots of affluent women having a girls night out… This will capture their emotions. And you can feature a special girls night out in New York City and the latest designer jewelry. Ongoing monitoring will enable us to really keep our finger on the pulse of what people are saying and adjust the award collection based on what we learn. Next slide – Another way to use this big data is use behavioral data Barry and I are on the same program but Barry would I phone
- The future of delivering effective tangible awards Is using DATA and Analytics to provide meaningful and relevant awards to your consumers. In addition to using social media monitoring to capture what your people are saying, You need to add other tools to understanding what your consumers are viewing, what they’re buying and what targeted communications they’re responding to – just like you’re doing in other aspects of the consumer loyalty program. If you follow this model, you’ll start to actually see the individuals in your program and will be better able to engage them. If you don’t capture their emotions and their wants at the right time, and you don’t give them what they want WHEN they want it, you won’t capture their loyalty.
- Why are we even looking at virtual rewards - Shift to social and online behavior – explosion of new touch points
- So many new touch points, you need a cost effective way to reward behavior that doesn’t have an explicit dollar value attached
- A similar survey was performed by Make Their Day in 2007, in which 57 percent of respondents reported that their meaningful recognition had no dollar value—today, that number has jumped to 70 percent. So, why not just use them instead of traditional tangible rewards.
- – so focus them on the intrinsic end of the continuum
- All engagement outcomes improved (one remained same) Four of 7 engagement outcomes are up significantly e.g. I feel motivated to go beyond my formal responsibilities up from 3.9 to 4.2