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Reward marketing is one of the oldest tricks in the book. Reward marketing refers to the marketing strategy where brands offer rewards and benefits to their customers. Some of them could be special discounts, points, free shipping, or exclusive access to products or events.

Reward or customer loyalty programs help companies build trusting relationships with their customers, enhance customer loyalty, and increase customer retention. A carefully thought-out customer loyalty program is all you need to outperform competitors. The question is how you can do that. So, let’s put the pieces together.

Why do you need to build a reward program?

Customer retention is at the heart of any reward system. Studies have shown that retaining an existing customer is easier and more cost-effective than acquiring a new one.

But customer loyalty program programs can be equally effective for targeting new customers. Here are some of the key benefits of building a reward marketing strategy:

  • Reward marketing promotions retain qualified customers. Returning shoppers are more eager to continue purchasing from a brand they have already interacted with. Also, they usually generate larger transactions than first-time buyers or visitors.
  • Reward programs allow you to gather valuable data that you can later use to deliver more personalized experiences. The more you understand your buyer personas, the better you address their challenges through targeted marketing material.
  • Loyalty programs offer an excellent opportunity to bring new customers in since returning customers become your brand ambassadors. They will be the ones referring their peers to your brand. This type of referral marketing expands your reach while significantly reducing marketing costs.
  • Successful customer loyalty programs help you stay top of mind, leaving the competition behind. Compelling rewards like exclusive access or gifts offer additional value to customers while giving them reasons to return.
  • Rewards are perfect for establishing emotional connections with your audience, giving you the ability to show them you share the same values with them. Consumers love brands that feel relatable and choose them over businesses they know nothing about.

Now that we have established why you should invest in a customer reward program, it’s time to explain why email marketing is one of the most effective ways to promote such a program.

Why email marketing?

Email marketing is sending email campaigns to your contact database to inform them about marketing activities, from announcing product launches to sharing educative content. It serves as a direct line of communication between your business and prospects and gives you the tools to build trust and lasting relationships. Let’s explore why you should never take emails out of your marketing equation.

  1. Dispatching emails to the correct recipients at the right time saves you time and money. With little management effort, you can set up automated sequences such as cart abandonment or product recommendation emails that specific user actions will trigger. And you don’t need to break the bank either because there is a plethora of cheap email services that do the heavy lifting for you. No wonder email marketing delivers a strong return on Investment (ROI):
  1. Email marketing allows you to collect the necessary data to build a successful rewards program. You can do so by incorporating elements like surveys or polls in your emails. These data-gathering options are available in most ESPs and enable you to send relevant email content.
  2. Using the data collected, you can segment your recipients and send them personalized emails based on their demographics, purchasing habits, preferences, and more. Since rewards are tied to past purchases, customized emails are all it takes to show them you care about their needs.
  3. Email marketing helps you enhance customer loyalty by targeting recipients already interested in your brand. Emails foster regular communication, allowing you to benefit from several occasions, like birthdays or anniversaries, to offer timely content that meets their expectations. Besides enhancing customer loyalty, email marketing can also help you build your brand identity and recognition. For instance, using professional email signatures at the end of your emails reinforces who you are and what your brand stands for.
  4. Emails are an excellent way to show value. Reward emails offer recipients helpful content regarding the points they earned or the products they could redeem. So, remember to include all necessary information on how to monitor or redeem their reward. They will probably save your email to have everything at the tip of their fingers.

Email marketing has many benefits - one of them being enhancing customer loyalty. That’s why using emails to promote your reward program is an excellent opportunity to enhance it. However, the benefits go both ways. Running a successful loyalty program is key to boosting your email marketing performance. Read further to learn all about it.

7 Strategies to boost your email marketing campaign performance using rewards

While the importance of having a loyalty program is indisputable, it isn’t a one size fits all marketing style. Local businesses should go for a different approach than popular e-commerce platforms. Using rewards to target recipients requires thorough research and a deep understanding of your target audience to find what resonates best with them. To help you sort things out, we compiled a list of the most effective strategies to incorporate rewards into your emails and boost both their performance and your sales.

1. Say thank you

Consumers are always eager to buy from brands that make them feel appreciated. Sending an email and thanking them for being part of your business journey is all it takes for them to feel special. When recipients see you put in the effort to show them your appreciation with an email made just for that, you create a deeper connection and catch their attention at the same time.

There are many ways to thank your customers, from giving discounts on future purchases to sharing engaging elements like videos, animation, or infographics. Some brands go as far as adding a note from the CEO.

This email campaign type creates recurring customers while increasing user engagement and subscription rates. Successful brands send such emails once a year, but you must perform market research to determine what works best for your niche and target audience.

Email subject line: Thank You for Your Purchase! Save $10 on Your Next Order.

This thank you email from Harney & Sons Fine Teas serves its purpose in a simple yet effective way. The brand thanks the recipient for the purchase and sends a warm message. The email subject line is precise so that the subscriber knows exactly what it’s about and what they will gain from opening the email. And let’s face it, reward emails need you to be straightforward about your offer from beginning to end. That way, you build trust while improving your open and click-through rates.

2. Reward redemption campaigns

Most online stores have a point-based system where points accumulate based on purchases. This tactic is popular in the food and beverage industry, where everything is centered around making a habit of the purchasing process. Consumers get excited when they see their points increasing, and redemption campaigns are a great way to urge them to redeem their points. The reward redemption phase is when their level of engagement is at its peak. So, don’t forget to congratulate them for hitting this milestone.

Redemption emails should be as straightforward as possible. Don’t let them wonder how they can redeem or search through large blocks of text. Use precise copy that clearly shows the action they need to take in order to get their rewards. Once they have redeemed their points to access a benefit, send a follow-up email to notify them of the successful redemption and inform them about their remaining points.

If you run a tiered reward program, use tier details to personalize your redemption email and offer customized perks. For instance, when customers reach VIP status, you should give them rewards like exclusive video content featuring industry experts rather than offering a discount. Experiential rewards feel more exclusive and increase engagement. They also build brand awareness, helping you bring your clients closer to your brand through additional touch points.

3. Offer birthday or anniversary benefits

Birthday and anniversary messages are two of the most effective tools in your marketing arsenal. Nothing beats a customized offer on these special occasions. It evokes a feeling of exclusivity and fosters customer loyalty. You could also opt for an email series. In the birthday scenario, you can dispatch the first email before the actual day to wish them well and beat your competitors.

Apart from making customers feel valued, setting up a birthday reward email is a great way to collect valuable customer information without violating data ethics. You won’t come off as pushy either since they will have to fill in the date to receive exclusive birthday offers. And you don’t need all that many to create effective birthday emails: just a warm message, a gift code for them to redeem on their next purchase, and some confetti, balloons, or other festive images to liven up the message.

Anniversary email promotions are even simpler for brands since they keep a record of when each lead joined their email list. This type of reward email goes in hand with the user’s level of engagement and enables you to deliver customized experiences. This is the perfect opportunity to send personalized updates based on past interactions and the benefits that came with them.

Email subject line: We got you a birthday gift!

Applebee’s email gets to the point right from the subject line. Who wouldn’t open an email announcing a gift for them on their special day? This reward email campaign is centered around the subscriber's birthday, making them feel special and urging them to redeem their gift with their next order.

4. Loyalty tier changes

Many reward programs are based on customers progressing to the upper tiers as they continue purchasing. After they reach a certain amount spent, they move up to the higher tier, where new reward options are unlocked. Once a customer reaches this tier upgrade, the most common perk is to collect points at an increased rate. Successful brands use this strategy to stand out from their competitors.

Customers ranking up calls for celebration. So, now is the time to show your gratitude and reward their loyalty. When this loyalty tier change happens, you should trigger an email to announce the new loyalty level they reached. Your customers are busy people, and there’s a good chance they missed the profile change. Ensure to include all relevant information and highlight the new tier benefits they unlocked.

Unfortunately, the tier change isn’t limited to customers ranking up. Marketers dealing with rewards may come across a tier downgrade too. This usually happens when a user has remained dormant for some time. And while that seems discouraging, it could be a blessing in disguise.

This is the perfect occasion to target recipients that haven’t proceeded with a purchase within a given timeframe through an effective email campaign. This email should showcase all the benefits they miss out on to lure them back in. Remember to run A/B tests to decide whether to opt for monetary or non-monetary rewards. Find out what resonates with your customers, and then use Xoxoday’s infrastructure to send out the most appropriate offering that will make them reengage with your business.

5. Seasonal reward emails

As with every email marketing campaign, reward emails should contain timely content. Savvy marketers draw inspiration from holidays to boost their email marketing campaign performance with rewards. Reward emails are more likely to hit their target when they have to do with upcoming holidays and seasonal events.

Do everything within your control to get into your customers’ minds and tweak your reward program to suit their seasonal needs. Leverage the occasion to promote your rewards through customized offers. For instance, free products are more compelling during the days leading up to Christmas when people need small gifts for their coworkers or social acquaintances. Or you could give free shipping over a specific price for Valentine's so that your recipients feel the need to spend more for their beloved ones.

But when we speak of holidays, don’t just think about Christmas or Valentine's. Don’t neglect to create reward email campaigns for lesser-known seasonal events to increase your emails’ visibility and recipient engagement.

Email subject line: Starbucks® Summer Game is back

Starbucks rewards are among the most popular and effective loyalty programs. But we’ll get to that later. In their email, they take advantage of a time of the year that many brands ignore in their reward promotions: summer. And the company doesn’t stop at that either but employs gamification, another powerful technique to engage loyalty program members. By turning the email offer into a game for subscribers to win exciting prizes, the brand increases open and click-through rates while keeping readers as engaged as possible.

6. Exclusivity is king

There is nothing customers enjoy more than receiving marketing messages that are meant just for them. Exclusive content is attention-grabbing, whether it’s about a product release or exciting business news. The word exclusive generates curiosity, leading recipients to think of you as a brand that always gives them access to insider information. This, in its turn, will do wonders for your email open rates.

Exclusive perks can be anything you think would entice your customers, from free shipping to special event invitations. You could benefit from these promotions to reward your top customers once they reach a specific purchasing threshold. Many brands take it as far as creating statuses for their best customers, such as gold or platinum, upgrading them based on their purchasing activity. Then, they tweak the exclusive deals sent to customers according to the status reached.

7. Points expiration reminders

We can take one thing for granted: your customers are members of multiple loyalty programs. So, no matter how engaged they are with your rewards program, they could forget how many points are left in their account. That’s why it’s your responsibility to let them know their stage in your points system. For your loyalty program to stay top of mind, you need to send point expiration reminder emails to inform them how many points they have and when those are about to expire.

This is a popular customer engagement strategy for marketers since, by definition, customer points expiring will most probably translate into another purchase. But just sending relevant information won’t cut it. You need to include suggestions on how to take advantage of the points left, like redeeming them for a purchase.

This is the perfect opportunity for you to generate urgency and benefit from FOMO (Fear Of Missing Out). Customers hate seeing their hard-earned points expire and appreciate companies informing them about it. Ensure you set up an automated email sequence so that recipients have enough time to redeem their rewards. Trigger your emails to be sent one month before the expiration date, some days before, and then on the actual expiration date.

Email subject line: Expiring soon! Redeem your Units now.

Ubisoft’s points expiration reminder email gets to the point from the start. It includes the necessary elements to create a sense of urgency and urge the recipient to open the email. The email subject line and email body leverage time-sensitive words like soon, now, or hurry. Every email component is relevant to the action the subscriber needs to take, from the bold and actionable email CTA to the personalized offer on how the recipient can redeem rewards. The email gets bonus points from us for adding a warm thank you note at the bottom.

How to measure the success of your email marketing campaigns the right way

Following the strategies analyzed, you can build the perfect email marketing strategy to engage existing and new customers. However, all your effort could go down the drain if you just leave it there. The whole point of including rewards in your emails is to monitor how they boosted your email campaign performance - or understand why they failed. By measuring their performance and continuously optimizing them, you are one step closer to reaching the desired results.

But what exactly should you be monitoring? Email marketing has several metrics to consider, and the process gets intimidating. So, we will present you with the most important ones to measure and analyze. They will help you figure out what you can do to gauge success.

1. Open rate

Your email open rate is the percentage of email recipients that opened your emails compared to the emails delivered. It doesn’t take an expert to know that this is a crucial email marketing metric to keep track of. If your recipients don’t open your emails, they will know nothing about your unique offer.

When recipients don’t open your email campaigns, it’s pretty evident that your email subject lines are underperforming. After all, they are all your recipients can see before opening your email. You need to A/B test your email subject lines to check what’s working best for your audience. Also, if you consistently send quality content, your subscribers will expect your emails to get value, and your open rates will increase.

2. Click-through rate

Another important metric is the click-through rate (CTR), meaning the number of recipients that clicked on your links after they opened and read your email. Increased click-through rates indicate that recipients take action with your email links and progress on the customer journey.

To improve this metric, there are certain questions you need to answer. Is your CTA clear, actionable, and strategically placed? Does the clickable action stand out from the rest of the text? Does the email copy lead the recipient to the desired action, or is it buried under large blocks of text? It’s also worth checking out which links subscribers click to understand what interests them.

3. Subscriber count

Your subscriber count indicates the number of people subscribed to your email list, indicating that your contact database is growing. The more recipients populate your list, the greater the chances of them engaging with your email content, which, in its turn, creates brand loyalty.

If your subscriber count isn’t increasing - or even worse, if it is decreasing, maybe you should work harder to gain visibility and build brand awareness. Make sure your sign-up process is simple, quick, and straightforward and that you give users compelling incentives to motivate them to fill in their personal information.

4. Bounce rate

By bounce rate, we refer to the number of emails that failed to reach recipients’ inboxes. So, your email bounce rate tells you how many emails make their way to inboxes compared to the ones you send. As you can tell, high bounce rates damage your sender reputation. But what could be the reason behind these undeliverable emails?

Factors such as spam trigger words, fake email addresses or typos, a full inbox, and more could affect your bounce rates. So, to fix the problem causing the bounces, first you need to know the reason behind them. The most crucial step is to clean your email list of invalid or fake email addresses. Ensuring you send your emails to the right people and that their contact information is up to date is a must-have for a low bounce rate.

5. Email campaign ROI

Your email campaign ROI is the return on investment your email brings. Placing a monetary value on your emails is key to understanding their success. But measuring it can get frustrating since it’s hard to figure out when an email campaign will create an impact.

Moreover, an email could have a return on investment even though it didn’t lead to a transaction. It could increase customer engagement, enhance lead nurturing efforts, or bring traffic to your website. Typical email marketing platforms don’t include such a metric in their analytics tools, so you need an overall approach to know what works and what doesn’t.

Email marketing case studies: how companies increased their email campaign performance with rewards

Rewards should aim to increase customer engagement and grow your subscriber base. To complete this guide, we couldn’t leave out the brands that nailed their email marketing campaigns using rewards. Hopefully, their example will inspire you to start including rewards in your emails and improve your email marketing campaign performance.

1. Starbucks rewards

Even entry-level marketers are aware of the innovative nature of the Starbucks reward program that takes advantage of an omnichannel customer experience. They were among the first brands to leverage a mobile app for their loyalty program. For customers to earn more points - or stars, to be exact - they have to pay through the app. That way, the brand can monitor customer transactions and gain access to a rich data pool regarding customer behavior.

From frequently visited spots to seasonal favorites, the brand records all information about its’ customers’ preferences. Then, it uses those data to send personalized email offers. It could be in the form of product recommendations or unique experiences just for Starbucks Rewards members. The brand went as far as collaborating with a famous airline company to create a great combo deal, giving its members 1 mile per every dollar spent at Starbucks.

The brand also uses seasonal promotions to motivate recipients to keep collecting stars and engaging with their emails. By using so many different, yet equally effective, rewards in their email campaigns, Starbucks managed to increase its email open rates, boost recipient engagement, and expand its contact database through Reward members sharing their personalized experiences.

2. Sephora beauty insider

Sephora’s Beauty Insider loyalty program is widely popular among consumers. Customers get rewards for each purchase based on the points collected. Then, the program members can choose how to redeem their reward points for gift cards or discounts. They can even get more exclusive rewards, such as in-store beauty tutorials.

What’s interesting about Sephora’s rewards program is that members can enjoy some of its perks without purchasing anything. All they need to do is join the brand’s email list, and then the brand sends out targeted email content with members-only deals. So, the company grows its email list asking for the bare minimum commitment on its customers’ side.

So, what Sephora does differently is going beyond encouraging recipients to move down the sales funnel. By sending rewards like exclusive event invitations, birthday gifts, or the chance to participate in giveaway contests, they increase engagement and improve their click-through rate. Sephora chose to invest less in transactional emails and more in emotional benefits, leading to their emails standing out from their competitors and the brand staying top of mind.

Key takeaways

Using rewards in your emails can work wonders for your email marketing campaign performance. Customers who receive reward emails feel appreciated and are more willing to give up their personal information. Then, brands can benefit from those data to create personalized messaging that will incentivize customers even more.

The key to boosting your email marketing efforts is to continue offering valuable email material with rewards matching your recipients' demographics, purchasing habits, and behavioral data. Make sure to include the strategies and tips shared above to keep your customers engaged.

The strategies shared above will enable you to craft reward email campaigns that deliver a high ROI and build trusting relationships between your brand and prospective customers. What’s left for you to build a top-notch reward program? The answer is simple. Explore Xoxoday’s top-notch tools that enable you to create personalized rewards based on customer behavior and help you drive business growth.

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