How People-First Marketing is Changing B2C: Rewards Programs

In one of the most famous scenes from vaunted AMC series “Mad Men,” Don Draper convinces a darkened room—filled with both colleagues and potential clients from Kodak—that Kodak should not call its new product a ‘wheel.’ Instead, Don says, it should be called a ‘carousel.’ And as he clicks through photos that show small (but big) moments with his family, Don gives his reasoning: The word ‘carousel’ helps people form “a deeper bond with the product”—a bond based on nostalgia, one of the strongest stimuli in the buying process.

Believe it or not, in this scene Don Draper is advocating for people-first marketing (PFM). He is helping Kodak think not as what it is—a company that wants to sell a product—but as the potential buyers it wants to attract. “People-first marketing is both an approach and a set of marketing strategies,” writes author Melody Yan, “that focus on personalizing customer touch points across channels to drive engagement and maximizing campaign performance.” As Don Drapers for the digital age (hopefully without the vices!), marketers today can use PFM to optimize and individualize how they engage with people in the funnel. This post will focus on one PFM method: rewards programs.

Bottom of Funnel, Top of Mind

Triggering after initial conversion, rewards programs try to keep customers active with a business post-purchase. Even at the bottom of the funnel (or past it), brands need to be top of mind: The goal is to convince buyers to reconvert over and over, especially for companies that use a subscription model or are in the CPG market. Companies can also angle to turn buyers and repeat buyers into evangelists, who can help enhance the customer base through word of mouth. (One study claims a single evangelist yields three new business referrals, on average.)

Are rewards programs worth it? Absolutely! But the numbers can be deceiving. Research shows that while only 26% of people shop more frequently at businesses that give them rewards (and only 17% “plan ahead to take advantage of rewards and promotions”), a whopping 60% of mobile users would “gladly switch brands to use a coupon.” It’s true that coupons and rewards are slightly different: Coupons are usually available to anyone, sometimes especially to cold prospects, and rewards are for customers. But there’s a thread to pull here. Everyone is in search of a bargain, so it’s good for business to pay customers back for their patronage and loyalty—even if most customers don’t engage with brands solely for the purpose of being rewarded.

Inclusive & Incentivizing

Marketers have raised eyebrows at rewards programs in the past—and it’s understandable. First, it may seem more transactional than innovative: Brands give contacts prizes in exchange for interacting with them. Secondly, if not done properly, you can make people feel more needled than nurtured. For example, I much prefer Manhattan soup shop Hale & Hearty’s method, in which I’m emailed when I unlock rewards. But I’m grated by Starbucks’s method, since Starbucks Rewards has emailed me 11 times in the last month even though I haven’t used the app in half a year. (Not exaggerating; I counted!)

Third, powerful companies have tried their hand at rewards programs—and failed. “What could be so hard about a simple loyalty program?” asked the Harvard Business Review in 2006. Its conclusion: unclear business goals, the act of making deals “good enough to change behavior but not so generous that they erode margins,” and the “puzzles of consumer psychology.” This trio of problem caused giants like eBay, Target, and American Airlines to abandon their rewards programs in the early 2000s.

But rewards programs are quintessential people-first marketing! And when done right, they can increase customer lifetime value. Consider timing, targeting, and testing. Space out your sends, don’t send everyone the same offers, and test the efficacy of different deals, subject lines, and visual styles on different audiences. Remember that on a basic level, rewards programs are people-first because they save customers money—and who doesn’t like that? It’s almost never a bad idea to give smart (see: still business-friendly) discounts and special offers. It builds trust, shows brand goodwill, and encourages product exploration (i.e., people will research and convert on things they wouldn’t have at full price).

On an even deeper level, these programs include and incentivize a segment once overlooked: existing customers. It wasn’t long ago that nurturing the converted was seen as less valuable than converting new leads, because rewards programs were not well understood. “Rewards management just seems to be the blind spot in bonus program marketing theory,” wrote one author in 2006. Rewards programs were also once relegated to the luxury and hospitality industries: airlines, hotels, cruise lines, theme parks. It wasn’t until about 2014 that articles began appearing online that helped everyday B2C customers—people who went to retail stores and restaurants, for example—learn about rewards.

A New Inverted Triangle

But today’s marketers are better equipped to understand the value of courting their own customers. It’s good for both the ‘B’ and the ‘C’ in ‘B2C.’ Customers want to feel valued, excited, and personally engaged—like they have purchased the Don Draper carousel, not the wheel. And businesses want customers to buy, buy, and buy some more—which is more likely to happen when they can demonstrate to people, “Look, see those other guys—they’re selling wheels. We’re selling carousels.”

Everyone is familiar with the pre-conversion funnel: prospect, lead, opportunity, purchaser. But what about the post-conversion funnel? The tip of this inverted triangle would be ‘evangelist,’ someone who can fuel stronger conversions through personal, informed vouching. Rewards programs move customers toward this goal by keeping them active and emotionally engaged, and by ensuring the relationship doesn’t end at the point of sale. And this is to say nothing of the fact that customer acquisition is “five to 25 times more expensive” than retention, which makes it even smarter for companies to invest in people-first marketing that satisfies the current base.

Does your company use a rewards program? If so, make sure you’re sending the right offers to the right contacts at the right time. If not, consider the benefits: It can inspire people who have already converted to keep converting, and it can create evangelists that provide even hotter leads. In the immortal words of Don Draper, “The day you sign a client is the day you start losing one.” PFM can keep you on customers’ good side.