Harvard's Insight on Reward Programs: Do They Really Work?

In their Harvard Business Review piece, Louise O'Brien and Charles Jones delve into an intriguing question:

"Do Rewards Really Create Loyalty?"

In this post, we'll unpack their insights and offer our perspective on the power of Loyalty Rewards. What are the secrets behind crafting an impactful loyalty program?

“Customer rewards have been reviled in the business press as cheap promotional devices, short-term fads, giving something for nothing…

"From airlines offering frequent flier deals to telecommunications companies lowering their fees to get more volume, organizations are spending millions of dollars developing and implementing rewards programs.”

Despite criticism as promotional gimmicks, rewards programs continue to grow, embraced across various industries for fostering customer loyalty.

Strategic Loyalty Implementation for Profitability

Success hinges on integrating rewards programs into a broader loyalty-management strategy, fostering mutual value sharing between customers and the company, thereby enhancing profitability over time.

Common Misapplications of Rewards

Many businesses misuse rewards programs as short-term promotions rather than leveraging them to cultivate long-term loyalty, thus failing to realize their full potential.

Personal Touch in Value Sharing

Traditional small businesses demonstrate the effectiveness of personal relationships and value sharing in building loyalty, a challenge for larger companies to replicate at scale.

Kalder offers customizable rewards to target every customer persona. Kalder empowers major brands to add a personal touch, making members feel exclusive with VIP access to gated chats, special events, and first access on new products. It is all about connecting deeper, making every reward feel like it's just for them.

Recognition of Customer Value Disparities

Not all customers contribute equally to profitability; thus, rewards should prioritize customers who provide the most value, fostering deeper loyalty and profitability.

Customer Behavior as the Basis for Targeted Rewards

Effective loyalty programs align with long-term company goals by incentivizing behaviors that drive sustainable engagement. By targeting valuable customer segments with attractive offers, resources are optimized, ensuring maximum impact and ROI.

Comprehensive Value Proposition to Customers

For rewards to be appealing, they must offer tangible benefits across cash value, choice, aspirational value, relevance, and convenience.

Partnerships for Enhanced Program Competitiveness

Collaborating with other organizations can augment a program’s attractiveness by broadening the spectrum of rewards and benefits.

Kalder is a loyalty solution that allows for cross-brand rewards, letting customers seamlessly partner with others without the usual delays and high cost.

Long story short, rewards really can create loyalty. Just focus on truly valuable customers and strategic ways to keep them coming back.

The debate about whether rewards create loyalty is missing the point. It's clear they do when done right. It is about more than just giving away points or perks; it's about making customers feel genuinely valued. Loyalty isn’t a one-size-fits-all game.

Programs need to be smart—

Targeting the right customers with rewards that resonate on a personal level. Kalder stands at the forefront of redefining loyalty by personalizing rewards and leveraging cross-brand partnerships, making every customer feel special.