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How Stock Rewards Can Fit into Your Loyalty Program, Part 1

Attracting, retaining, and engaging customers is top of mind for every loyalty program owner and marketer right now. March and April were devastating for many businesses, and the scale of the pain was further confirmed by April’s 16.4% overall retail sales decline (with some sectors hit even harder). While May’s numbers increased, it will take more than one month to arrest the longer, more durable trend for businesses. Companies are getting creative with rewards points as a way to combat these declines: Hilton Honors and Marriot Bonvoy are offering grocery perks on their credit cards and airlines are pre-selling blocks of points to banks to gain short-term liquidity, to highlight just a few examples.

The question though is what to do with traditional loyalty programs next—many of which are as battered as their owners by the economic downturn.

The bottom line is that for businesses willing to innovate, this upheaval is a unique opportunity to bring real innovation to loyalty programs, and ultimately attract and retain customers in a new way. Much as the last two economic downturns have proven fertile ground for innovation, this latest depression provides the same opportunity, in particular for loyalty programs.

While every loyalty program is unique, there is an innovative solution that can be additive to most; businesses can now introduce a new kind of loyalty reward to their programs through fractional shares of stock. As we’ve written about previously, stock rewards have shown to motivate consumers to shop more frequently, spend more, and feel more engaged with the brands rewarding them. Furthermore, as we discussed in a previous webinar, businesses rewarding customers for their loyalty in fractional shares of stock are pushed above competitors in favorable market conditions, and are more insulated in shrinking sectors.

Before we discuss in depth how stock rewards can fit into traditional loyalty programs, let’s review four predominate earn models utilized by most rewards programs today:

  1. Membership Earn Model: In this model, members join a program to receive benefits. Benefits are available to members and not available to those not in the club. The Barnes and Noble Membership is a prominent example. More readily utilized though is Amazon Prime, where members access a bevy of perks by joining.
  2. Threshold Earn Model: Members reach pre-set targets or tiers and receive rewards and exclusive benefits. Airline loyalty programs are great examples of this model whereby reaching Gold or Diamond accrues additional rewards like boarding sooner, free checked bags, and upgrades.
  3. Interval Earn Model: Members receive rewards following regular periods, usually dictated by purchases or time/tenure. The Starbucks Rewards program is a good example of how to engage consumers using an interval earn approach.
  4. Stored Value Earn Model: This is the most complex model, whereby members accrue value over time through their relationship with the brand and purchases. Value is most often denoted by dollars or points that can be redeemed. Many credit card programs rely on the stored value model, as do major retailer programs like Best Buy Reward Zone or Adidas’ Creator’s Club.

While most traditional programs utilize one or a combination of these models to draw members closer to the brand, many members are also worn out by the “same old” loyalty experience at each brand. It has been widely written about how most people are members of 10-15+ loyalty programs, but barely active in half of them, at best. What this moment– and what customers are calling for and what consumers want is a different kind of reward. Consumers today want their favorite brands, particularly those they choose to be loyal to, to be different– to take stands on political and social issues, to invest in their employees and communities, and to demonstrate they care about their customers in ways beyond coupons and sales promotions.

At Bumped, we believe that a solution for brands comes in the form of investment in your customers and in your relationship with them through a new type of reward: fractional shares of stock. As we’ll discuss in our next post, no matter the earn model or combination of structures you utilize in your program today, stock rewards can fit seamlessly into an existing rewards program. It’s also just the kind of purpose-driven innovation customers crave (while also making a strong business case too!).

Tune in for our next post where we’ll dive into specific ways stock rewards can support each of those earn models.

Interested in learning more about stock rewards and having a conversation with our experts? Reach us at [email protected]!

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© 2020 Bumped Inc. All rights reserved. Use the following links to access Bumped Financial LLC's Privacy Policy, Terms of Use, Customer Agreement, and other Legal Disclosures.

The Bumped app and website are operated by Bumped, Inc. Brokerage services are provided by Bumped Financial LLC, member FINRA ↗/SIPC ↗. More about Bumped Financial LLC on FINRA’s FINRA BrokerCheck website ↗

Investing in securities involves risk, including possible loss of principal: Not FDIC Insured • No Bank Guarantee • May Lose Value. Past performance is not a guarantee of future results. Nothing on this site should be construed as an offer to purchase or sell securities.

Any market, economic and / or performance data shown is for hypothetical and illustrative purposes only. Data does not represent actual results.  Participation is only for investors who understand and agree to the risks inherent in their Bumped Accounts. Only qualifying purchases made according to the terms and conditions are eligible for stock rewards. Bumped does not charge brokerage fees. Bumped reserves the right to restrict or revoke any and all offers at any time.

Investors receive shares of ETFs as rewards. Investors should consider their investment objectives, risks, carefully before investing. This and other information are found in the fund prospectus. Please read the prospectus carefully before you choose to invest.

Rewards are accrued for investment after qualifying purchases, but may be reversed if the qualifying transaction is later reversed. Bumped does not assume the risk of market movements for returned items or disqualified transactions. 

Bumped Inc., its subsidiaries, agents, and employees expressly disclaim any responsibility for and do not maintain, control, recommend, or endorse third-party sites, organizations, products, or services, and make no representation as to the completeness, suitability, or quality thereof.

A few notes on fractional shares: they’re typically not transferable between brokerage firms. If you want to transfer your Bumped account, you may have to sell your fractional shares first. Fractional shares can’t be put into certificate form or physically mailed, nor do they have voting rights.