What Inbound Marketing Teaches Us About Reward Programs

April 6, 2017 Demi Oba

While inbound marketing has been studied since the 90’s, the practice has never been more prevalent than in today’s thriving marketplace. More and more brands are turning away from the frustrations that accompany traditional advertising and trading their megaphones for genuine conversations with their customers.

In hindsight, the rise of inbound marketing seems almost inevitable. Outbound efforts were often characterized by very harsh competition for limited customer attention. This led to increasing advertising costs that just weren’t matched by increases in effectiveness.

inbound marketing seth godin quote

Customers were drowning in advertising noise, and eventually the bubble had to break… which it did. We broke through to a new way of marketing that “turns strangers into friends and friends into customers”.

The interesting thing is that the same conditions that gave rise to inbound marketing also created major opportunities in customer retention and rewards programs. Vying for customer attention with increasing acquisition costs led savvy marketers to view customer acquisition in new ways, and to realize the importance of customer retention.

inbound marketing conditions

However, this realization was just the beginning. A closer study of the inbound marketing method reveals that inbound marketing can teach us a lot about how to build the best rewards programs.

 

 

Start By Attracting (Not Interrupting) Your Customers

The most fundamental difference between inbound marketing and its traditional counterpart is that inbound marketing is geared towards interacting with customers based on interest as opposed to interruption.

inbound marketing interruption

Whether it’s a pop-up ad, a billboard on a busy street, or a commercial that comes on between portions of your favorite show, traditional advertising is meant to capture a customer’s attention – often by force. While these methods can be effective in getting your message in front of customers, they frequently fail to get that message to actually resonate with them.  Customers view these interruption advertisements as intrusive and have learned to filter these messages out quickly and remorselessly. This isn’t too surprising considering the average American sees between 4,000 and 10,000 advertisements daily.

On the other hand, the content that you’ll frequently see as part of an inbound strategy is rarely sales-focused or pushy. Instead, inbound content strikes a conversational tone that attracts customers to topics that they care about and reportedly generates 54% more leads along the way.

inbound marketing lead generation

Rewards programs work in much the same way. At the heart of every strong rewards program are rewards that customers genuinely value and, just like with inbound content, this interest is the key to customer engagement.

inbound marketing customer satisaction diverse rewards

There are many ways to ensure that your rewards program creates value for your customers but one of the easiest is adding diversity to your rewards portfolio. Different customers are motivated by different things, so a brand that varies the rewards in their program is more likely to have offers that appeal to each of their target demographics.

Another good way to discern what your customers want out of a loyalty program is by asking them. Nobody knows what your customers want better than they do, so involve them in the process and the results might surprise you.

inbound marketing what customers want to know CTA

The secret to successful inbound marketing and successful rewards is providing customers with the information or rewards that they actually care about. If customers aren’t interested, your message will get filtered out like thousands of other messages daily.

 

 

Converting Customers is a Game of Give & Take

Inbound marketing may be based on attracting customers but that’s just the beginning of the process. After you’ve created content your customers genuinely value, it’s time to convert those exploring visitors into contacts.

The key insight here is that in inbound marketing, conversion isn’t a brute force activity. Instead,   converting customers is seen as an exercise in give and take. Inbound marketers take time and effort to create resources that their customers value and provide these resources in exchange for contact and other information from their customers.

inbound marketing value exchange

The inbound strategy shows a keen awareness that reciprocity is the key to strong customer relationships. If you want something from your customers, you should be willing to provide them with something they value in return.

Contrast this to traditional sales tactics like buying email lists and contacting customers without consent, and the strength of the inbound method becomes obvious.

inbound marketing irritate

While converting shoppers to customers is the primary focus for most marketers, there are many other micro-conversions that take place over a customer’s life cycle. Consider the conversion from a customer to a repeat customer, or from a repeat customer to a referral or even to a brand advocate. Each of these micro-conversions can benefit from the give and take mentality we see in inbound marketing. In fact, rewards programs frequently help brands move customers through these micro-conversions, but only when customers are adequately compensated for their effort.

inbound marketing uber

A great example of this principle in action is Uber’s referral program. Uber offers both drivers and riders significant financial compensation when they refer a new customer or driver. These rewards are so substantial that people often wonder why Uber even uses them.

inbound marketing uber referral program CTA

The truth is, like inbound marketers Uber understands that conversion is a quid-pro-quo process and that what they spend in referrals they recoup in spades through new acquisitions. Conversely, Uber wouldn’t be the start-up success it is today if it offered its customers cents on the dollar for referrals.

The lesson for rewards programs is that if a conversion is valuable to your brand, don’t be afraid to put your money where your mouth is and offer your customers a substantial reward. To paraphrase an old proverb: “You convert more customers with honey than vinegar”.

 

 

Analysis is the Last Step But the Beginning of Success

A focus on analysis is one tactic that both successful inbound and outbound marketing strategies share. Whether you’re reaching out to customers or allowing them to discover your brand on their own, the trends from previous campaigns are extremely useful in guiding your future strategies.

Analysis allows you to figure out what’s working and what isn’t so you can develop your marketing strategy as you grow. This is particularly important for inbound marketers because the entire inbound strategy is based on meeting customer’s needs. If your content isn’t hitting the mark, it needs to be adjusted ASAP.

inbound marketing compass

The importance of analysis goes double for a brand’s rewards program. Like inbound marketing, successful rewards programs are rooted in understanding a customer’s desires and, like BlackBerry and MySpace will tell you, customer desires can change fast.

Analyzing the results of your rewards program can help you strengthen your brand in two key ways. Firstly, it can help you improve your program by telling you what rewards customers use most and what ones they value less. Working with this data can lead to a more robust program that provides more value to your loyal customers.

inbound marketing attributable data

More importantly however, your rewards program allows you to collect attributable data. This is important because attributable data allows brands to build customer profiles and understand a customer’s journey on an individual level.

Working with attributable data helps brands optimize not just their rewards program but their entire product offering. Brands can learn what products customers view as complementary or if there is a pattern to the order that customers buy products, among many other things. This information can lead to effective strategies like bundling or introductory offers – insights that just aren’t possible with aggregate data.

inbound marketing data needs

The importance of analysis is mirrored in both inbound marketing and successful rewards programs because both are designed to understand and satisfy a customer’s needs. While customers can frequently tell you what they need, more often than not their data will show you.

 

 

Inbound Tactics are (in)Bound to Strengthen a Rewards Program

Inbound marketing has made a huge splash in the way businesses reach their customers, and that splash has created ripples that extend well beyond the realm of marketing.

The inbound methodology is rooted in value-based customer attraction and conversion which encourages engagement at each step of the process. These efforts are then analyzed and improved to create a cycle that uses past campaigns to strengthen future ones. These principles have helped grow inbound marketing into the widespread practice it is today.

Rewards programs stand to benefit from the lessons that inbound marketers hold dear and successful implementation of these tactics can create a lot of value for customers and brands alike.

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