Incenting Non-Purchase Behavior Great, But Only If Numbers Add Up

To make a CRM rewards program effective today, it needs to move beyond points only offered for purchases. (Heck, even the Pope is offering concrete incentives for following him on Twitter.), an e-tailer that has already gotten creative by offering mobile-only offers, is trying to do just that by offering loyalty points for visiting the site on several consecutive days.

But such a program will quickly fail—and fail in such a way as to be counter-productive—if the points are not set properly. In other words, if the number of points needed to get a reasonable prize and the number of points offered for non-purchase activities are set such that it's impossible to redeem those rewards in a reasonable period of time, this campaign won't work. The initial stats suggest that may have fallen into that particular trap.

"We wanted to create a loyalty program that rewards our members not just for their purchasing but for all the ways they interact with our brand," Elizabeth Francis, the site's chief marketing officer, said in a statement. But if their goal was to change shopper behavior, they need to set these non-purchase points much higher.

According to a report in Women's Wear Daily, site visitors—who must also be site members as it's a member-only e-tailer—will be given five points for every dollar spent, 25 points for friend referrals and 100 points for visiting the site five days in a row. That last one—visiting the site five days in a row—is a bit of a hassle.

And what will that 100 points buy? Well, a gift certificate (valued between $80 and $100) requires 25,000 points. A loyal shopper could perform that quintuple-consecutive-visit chore 249 times in a row (that's visiting the site every day for 1,245 consecutive days, which is almost visiting the site every day for 3-and-a-half years) and still not qualify for that gift certificate.

For a mere 3,500 points (or 175 days of consecutive visits, which is just shy of six months), the shopper could get free domestic shipping. The problem with that last one is that many sites already give away free shipping and it's not clear the level of shipping. If it's overnight shipping, that would be a lot more interesting, but it doesn't appear to be.

As for that 25 points for friend referrals, that is arguably even worse. That's retail gold. True friend referrals are very likely to yield revenue to the site, as they often come with such high credibility. That's why shoppers are generally hesitant to recommend sites to friends unless they are truly enthusiastic about the site. Putting that referral number into context, a shopper would have to recommend the site to 1,000 friends (that's one really popular shopper) to qualify for that gift certificate. Really, Gilt? Someone recommending 980 friends isn't enough for you for one $80 gift certificate?

This is not the first time we've seen e-tailers try and offer shopper incentives for non-purchase behavior, but then make the point-levels selected such that there is truly no incentive. At least there isn't any incentive as soon as shoppers take a hard look at the points awarded while using a calculator. If your site or store is offering such a program, crunch the numbers and sayw it out loud. If the non-purchase behavior required to get a nice reward sounds absurd, that's probably a good heads up.

CMO Francis is quite correct in her point about incentivizing a wide range of behavior. Now she has to radically rework the numbers to deliver on that lofty goal. Otherwise, the loyalty she seeks will morph into scorn.