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How To Test and Refine Promotional Offers For Your Loyalty Program

How To Test and Refine Promotional Offers For Your Loyalty Program

Promotional offers and bonuses are a crucial part of a loyalty program strategy. They can help increase participation and motivate customers to take certain actions or behaviors, such as completing tasks or buying more.

These offers, such as discounts on purchases or earning bonus points on new products or services, help provide value for customers while driving sales and boosting overall engagement. When utilized strategically, promotional offers and bonuses can serve as powerful tools to enhance customer satisfaction and drive long-term loyalty.

The ability to evaluate and refine promotional offers and bonuses directly impacts customer engagement, brand loyalty, and, ultimately, the bottom line. However, it can be a daunting task for marketers to start putting together a promotional plan: what type of offers or bonuses should they provide? How frequently should they send customers offers? Should different customers receive different offers?

In this article, we'll explore processes and ideas for how to test different promotional offers or bonuses within a loyalty program. By using loyalty program data, marketers can refine their tactics and increase the effectiveness of different member promotions. Businesses can benefit from better and more impactful promotional offers that drive their member base and maximize the financial ROI of their loyalty programs.

 

How To Start Crafting Compelling Offers


Before plunging into the varied waters of offer testing, you first need to know how to create offers that resonate with your specific audiences. Your starting point hinges on having a detailed understanding of your members. Survey results, past shopping or behavior data, and demographic information can unveil preferences and past reactions. 

(Hint: if you’re just starting out in collecting or refining customer data, then begin with broad data points to start, then you can create more tailored and detailed offers once you’ve captured more detailed customer data.)

Start by understanding what motivates your customers. Are they driven by discounts and freebies, early access to new products, or exclusive experiences? Knowing the 'why' behind their loyalty empowers you to tailor 'what' you offer.

Once motivations are clear, refine 'when' and 'how' offers are made. For some, frequent small perks might be more impactful; for others, the grandeur of a significant annual reward is the key to their hearts.

 

4 Ideas for Testing Promotional Offers or Bonuses


When it comes to testing promotional offers, there are several creative and effective strategies to consider. One of the most tried-and-true approaches is A/B testing, where you can compare the performance of two different offers to see which one resonates better with your audience. Here are 4 types of promotional offers or bonuses you can test within your loyalty program. 

 

Urgency - The 'Now or Never' Test


Urgency is a powerful psychological trigger that compels immediate action. It often precipitates higher response rates, but its strategic use is non-negotiable. You can evaluate how different urgency levels in your loyalty offers influence conversion rates by testing these offers against different customer segments.

One example of how to run this test would be to create two offers, Offer A and Offer B:

Offer A includes a 24-hour window for redemption, while Offer B extends the period to 72 hours.

Segment your audience into two equal groups and launch the time-bound offers simultaneously. Measure how many members from each group take up the offer within the designated time frame.

If Offer A outperforms B significantly, you've learned that a more stringent time constraint is effective.

However, be wary of overusing this test, as diluting the urgency novelty can diminish its effects.

Frequency - Testing The Cadence and Timing Of Offers or Bonuses


How often members receive offers is another method you can experiment with to determine effectiveness. If you give customers offers too frequently, they could lose appeal; too sparsely, and engagement might dwindle. 'Frequency' tests can analyze how various offer release frequencies affect overall engagement and redemption rates.

For example, you can experiment with giving customers monthly deals versus quarterly promotions. Over a set period, track member interactions with the different offers. Look for patterns of fatigue or peaks in engagement correlated with the offer cadence.

The aim is to find the sweet spot where members are neither overwhelmed nor underwhelmed. Budget for the most effective frequency that sustains interest without desensitizing recipients.

 

Incentive Type or Bonus Amount - What Value Motivates Action?


Consumers are diverse, and so are their reactions to promotional rewards. Testing different incentives, offers, and bonus values can reveal whether customers are more enticed by a percentage discount, cashback, bonus points, or flat monetary discounts.

For example, say you create two different offers: Offer A gives a 20% discount, while Offer B awards customers with a $20 cashback on a certain spend amount.

Randomly present the offers to groups of similar members and measure the redemption rates. How members respond to the different offers can guide you to a more in-depth understanding of the preferred incentive type for different audiences, allowing you to optimize future promotions even further.

 

Cross-Buying or Upselling Offers - The Add-On Test


Encouraging customer spending across a wider range of products or product categories can enhance individual customer value significantly. If you notice that customers are buying only one item or staying within a specific product category, if may be worth seeing if different promotional offers can motivate them to expand their buying habits. 

There are different ways you can experiment with motivating members to change their shopping behaviors by buying across different categories. For example, you could create an offer that provides bonus loyalty points for purchasing items in related product categories, or offers discounts on complementary products within the checkout process.

The important thing is that you closely monitor and control which offers are provided to which test groups so you can properly assess whether they had any impact in driving cross-category purchases. Understanding whether factors like incentive type or convenience drive cross-buying and upselling can inform your future strategies.

 

Understanding and Using Your Results

 

The data gleaned from your A/B testing efforts are more than mere numbers; they are guideposts pointing to the most effective strategies for your loyalty program. It's imperative to adapt and iterate, taking the learnings forward to not only optimize current campaigns but also to inform the design of future offers.

By nurturing a culture of testing and learning, you foster an environment where innovation thrives, and customer satisfaction is a measurable and continuously improving metric. Remember, the art of A/B testing isn't confined to deciphering what worked, but rather, understanding why it worked and how to replicate and scale success. In the end, your focus should always be on delivering customer value and elevating the customer experience—one offer at a time.

Having the right loyalty platform is essential for this entire process; from creating and setting up the offers with the right parameters to providing in-depth analysis and reporting of the different outcomes. Brandmovers's loyalty platform offers built-in testing capabilities that let you tailor your offers specifically to your program and customers and drive results.

Reach out to us today if you want to learn more about how A/B testing promotional offers and bonuses within your loyalty program can provide you with more possibilities and opportunities to drive the bottom line.