THE CLARUS Blog

What Happens to Your Loyalty Program When Transactional and Experiential Benefits Work Together

From simple discounts to cosmetic makeovers, every interaction your brand has with a customer is an opportunity to create a memorable loyalty moment.

Combining transactional benefits with experiences that are directly relevant to your best customers will increase your chances of attracting new members and cultivating a long-lasting relationship.

 

Transactional Benefits Are Still Important

There seems to be a focus on experiential benefits in the media, but transactional benefits still hold an important place. They make consumers feel like smart shoppers.

People still demand traditional benefits such as discounts and free shipping. These types of benefits impact consumers’ behavioral loyalty.

These benefits are some of the first ones that your customers will experience from your loyalty program and serve as a vital hook in retaining them as members.

According to the 2019 Premium Loyalty Study, the top three benefits that would motivate a consumer to invest in a premium loyalty program include instant discounts that can be used whenever they shop (67%), faster, free shipping (61%), and free giveaways (56%).

Don’t discount the value of transactional benefits.

They’re simple, easily accessible, and give consumers that undeniable feeling of getting a deal. And things like instant discounts especially entice customers to sign up for loyalty programs.

But the goal isn’t just enrolling members in your program. The goal is to get them to become active members and retain them.

Memorable experiences hold the key to unlocking sustainable emotional connections and creating customer retention.

That’s where experiential benefits come in.

 

Experiential Benefits Complete the Loyalty Loop

Transactional loyalty is an attractive and necessary ingredient in building brand advocates.

But experiential loyalty elevates the member experience and creates sustainable emotional connections between brands and consumers.

To complete the “loyalty loop”, these emotional connections must be made between the brand and consumer.

Consumers want material benefits, but they also want special treatment. And, quite often, that special treatment comes in the form of experiences.

Loyalty program members want that feeling of exclusivity, which triggers that emotional response to the benefit.

Experiences lead to emotional loyalty, which helps bridge the gap between transactional and true loyalty.

So, while transactional benefits make consumers feel smart, experiential benefits make them feel special.

More brands are investing in experiential marketing over product marketing, especially since Millennials and young generations value experiences so highly.

 

Brands Balancing Transactional and Experiential Benefits

There are many brands out there with successful loyalty programs that are balance traditional benefits like discounts with exclusive experiences.

For example, Sephora’s Beauty Insiders program not only includes points and discounts, it also includes exclusive experiences like in-store makeovers for higher tier members.

Another perk that has value in a premium tier are member-only exclusives. These can be products not broadly available, or early access to sales or even curated content

REI is another excellent example of a retailer that built its premium loyalty program around experiential benefits.

The American retail and outdoor recreation services retailer charges a minimal $20 lifetime membership fee, which earns customers various transactional benefits.

But what sets REI apart is its experiences, from outdoor classes to organized trips around the world. These once-in-a-lifetime adventures turn customers into lifelong brand advocates.

 

Loyalty Program Benefits are a Balancing Act

Striking a balance between transactional and emotional benefits helps brands attract and retain more customers.

Transactional perks are necessary, but experiences take loyalty to another level. They create sustainable emotional connections between brands and consumers.

Brands seek differentiation to stand out in the eyes of consumers and apart from their competition. And many customers find that differentiation in experiences that build emotional connections and brand loyalty.

Understand your customers to know what experiential benefits will work for them.

Transactional benefits draw your customers in, and experiential benefits make them want to stay.

When transactional and experiential benefits work together, customers are more excited to join your loyalty program and tend to stick around for the long term.

Are You Ready to Go Premium?

If you want to become a 24/7 presence in your best customers' lives, it's time to get started.