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Rewards vs. Points: Build Better Brand Relationships
When it comes to mobile advertising, success is about engagements, not impressions.
Engagements build stronger relationships between brands and consumers. They enable brands to create successful loyalty programs, developers to increase user retention and consumers to have better experiences.
However, the persona of mobile engagements is changing. Users don’t respond to tried and true techniques. Out with the old and in with the new – or in this case, out with points-based loyalty systems and in with made over brand relationships.
Building better relationships
In this age, it’s universally acknowledged that impression-based advertising is bad for business. Take banner ads, for instance. Banner ads have dismal click through rates of 0.1 percent and worse yet, 38 percent of those clicks are the result of "fat finger syndrome" – i.e. they're accidental. Users don’t pay attention to display ads, unless it’s to close particularly annoying content.
Instead, many brands turn to advertising that adds value by forging emotional connections with consumers. They do this through rewards.
There are two types of rewards. The first are points-based rewards. These systems enable users to accumulate points inside various apps and use them to buy items from the brand of their choice. The second branch of rewards are moment-based rewards. These are real-life and virtual goods that appear during in-app activities. Items range from free samples to gift cards to mobile game currency.
How point systems work
Brands like Lootsie and SessionM boast points-based systems. While different, these platforms both enable users to accrue points and cash them in for rewards.
Lootsie offers a system comparable to credit cards points. Users earn points for activities in Lootsie-integrated apps. These points are credited to their Lootsie Marketplace account. Users can then sign into the Marketplace and redeem their points for brand products.
SessionM apps each feature an icon that redirects users to their mPoints account. The account offers users ways to earn mPoints: users can check in to locations, watch ads and fill in surveys. Users can then trade in their points to enter sweepstakes or save up for gift cards and merchandise.
Here, you can see the funnels in redemption processes for both moment-based and points-based rewards. Brands that engage users with moment-based rewards are less likely to lose them in the redemption funnel.
A better way
To start, there are a few issues with points-based systems.
1. Points add another degree of separation between brand and user. Points-based system create extra steps to the redemption process. As this process becomes more complicated, users are less likely to follow through, causing brands to lose out on engagements.
2. Points take brands out of the moment. These systems cannot guarantee brand exposure to interested consumers. As brands don't present rewards directly in the app, users only engage with brands if they choose to do so in the marketplace. Consequently, many brands miss a vital opportunity to connect with consumers in the moment. Smaller, unfamiliar brands suffer as users don't trust them and skip over their inventory. Likewise, big brands can miss the chance to promote a new products. This means that points-based systems only create impressions, not engagements.
Kiip has built a business around engagement advertising. With Kiip, brands can target “achievement moments” in mobile apps. Moments occur when users experience high emotion, such as winning a level of a mobile game. During achievement moments, users experience 40 percent more excitement. Brands can harness this positive emotion by introducing relevant rewards at the optimal time. When these rewards appear, user excitement jumps another 29 percent.
By taking advantage of timing, moment-based rewards remain unintrusive. Moments happen organically – and often. By taking advantage of timing, brands reward users at the exact moment they are most engaged. Brands are naturally included in the moment.
When brands introduce relevant rewards, they become a part of the happy memory. Rewards are a brand’s way of congratulating the consumer. It turns out: this works. According to the 2014 Bond Brand Loyalty Report, satisfaction is highest when consumers receive pertinent brand communication.
Some points-based companies brag about giving consumers the freedom of choice. But moment-based rewards bypass this by inherently understanding what consumers want.
For instance, a user who beats a record pace in a running app receives a Propel Fitness Water for replenishment. Kiip learns cues like activities and preferences and thus does not need to burden users with irrelevant options. Kiip becomes smarter over time, recognizing what users want in the moment they want it most. It accomplishes this with a simpler, more relevant redemption system that creates instant gratification. Some rewards are immediate, while others only require an email. There’s no obligatory account management or complicated redemption process.
Furthermore, moment-based rewards are serendipitous. They remain an added benefit to loyal users, not a motivation to download an app. Users are rewarded on a variable schedule which enables app and game developers to sweeten the natural behavior patterns that already exist – not create new ones. When users stumble upon rewards during their routine in-app activity, the reward produces further excitement for the developer and the brand.
Here, Kiip CEO Brian Wong explains why points-based systems (i.e. incentives) are harmful and how brands should instead own the moment.
Every single one of our rewards is serendipitous, so everything is surprise and delight. Now why did we choose that? Well, we want you to use that running app because you want to use a running app, not because you want the reward. I think you might have seen other marketers take the, I would say, more transactional approach to rewards and incentives – let me use this to make you do something, in other words. But I’d actually rather say, let the consumer be who they are, and then be there to accommodate them … Instead of having the rewards define the behavior, we prefer to have the behavior define the reward.”
Moment-based rewards empower brands to create emotional campaigns. They can promote new products, showcase seasonal sales and expand their user base to a new demographic, to an audience that's interested in connecting. There’s no risk of missing out.
Moment-based rewards are how modern brands build relationships with their consumers. It's about more than impressions. It’s engagement advertising.
Kiip redefines how brands connect with consumers through moment-based rewards. Rewards increase engagement and purchase intent, and 84 percent of mobile users say they prefer mobile rewards over ads.
Hundreds of brands already use Kiip. To learn more, visit kiip.me/brands.
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