Now + New + Next: Rethinking Rewards in the New Engagement Economy

Proprietary and Confidential © 2011 Maritz

Now + New + Next Rethinking “Rewards” in the New Engagement Economy

December 10, 2013

1

Proprietary and Confidential © 2011 Maritz

2

Mary LuckeyDirector

Reward Strategy

Barry KirkVice President

Loyalty Strategy

Proprietary and Confidential © 2011 Maritz

I am: •Currently running a rewards program.

•Planning to launch a program soon.

•Evaluating whether to launch a program.

3

Proprietary and Confidential © 2011 Maritz

4

5

Proprietary and Confidential © 2011 Maritz

6

7.4

US consumers are enrolled in

loyalty programs.

Maritz Loyalty Marketing 2013 US Loyalty Report

Proprietary and Confidential © 2011 Maritz

7

16%Only of consumers

redeem for rewards in US loyalty programs

Forrester 2013 State of Loyalty Programs

Proprietary and Confidential © 2011 Maritz

Part

icip

ati

on

Time

Initial Awareness & Enrollment

Participation, but with lagging engagement levels

Disengagement

The engagement cliff

Based on the work of Paul Lawrence and Nitin Nohriaat Harvard Business School

©2013 The Maritz Institute. All rights reserved.

The Four-Drive Model of Motivation

Driven to engage,cooperate,“fit in”to the community

Driven to “create” better self, team, organization, world

Bond

Create

Driven to acquirestuff, status,resources

Driven to defendstatus, stuff, ideas and relationships

Defend

Acquire

CHOICE

9

10

Pendulum swing

Traditional Rewards

Virtual Rewards?

Proprietary and Confidential © 2011 Maritz

11

Traditional rewards

Proprietary and Confidential © 2011 Maritz

12

Proprietary and Confidential © 2011 Maritz

13

Proprietary and Confidential © 2011 Maritz

14

Proprietary and Confidential © 2011 Maritz

Traditional reward strategy

15

Proprietary and Confidential © 2011 Maritz

Today we have an avalanche of data …

Proprietary and Confidential © 2011 Maritz

People in reward programs have changed

• New Generations– By 2015, the oldest Millennials

(born after ‘77) will be 38 years old1

• More Digital Devices– Average U.S. household has 5 digital devices,

and some have 15 or more2

• Soon, More Devices than People! – Number of mobile-connected devices will soon

exceed the world’s population3

17

1 Pew Research Center’s Internet and American Life Report

2 Bloomberg Tech Blog3 Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update

Proprietary and Confidential © 2011 Maritz

People’s expectations have changed, too

18

“I expect personalized experiences in all my online

environments.”

“I’m a 20-something who likes music downloads and

designer handbags … so don’t show me

housewares, sporting goods, and lawn care.”

“I want access to my rewards site on my smartphone,

tablet or laptop – depending on where I am and what I’m

doing.”

Proprietary and Confidential © 2011 Maritz

Consumers are in the drivers seat

19

Proprietary and Confidential © 2011 Maritz

20

Social intelligence is big data

Sentiment

VolumeVelocity

Emotion

Proprietary and Confidential © 2011 Maritz

21Emotion

Volu

me

Affluent Women – Conversations

Maritz social intelligence study : affluent women

Proprietary and Confidential © 2011 Maritz

22

Proprietary and Confidential © 2011 Maritz

23

Behavioral Intelligence is also big data

Proprietary and Confidential © 2011 Maritz

We are: •Currently using big data in our reward strategy.

•Evaluating how to use big data in our reward strategy.

•What’s big data?

24

Proprietary and Confidential © 2011 Maritz

Future strategy for traditional rewards

25

Behavioral Intelligence Social Intelligence

26

Pendulum swing

Traditional Rewards

Virtual Rewards?

• Likes

• Shares

• Comments

• Levels

• Points

• Badges

• Trophies/Achievements

• Virtual “goods”

27

Virtual rewards are non-physical goods that exist online and are earned by participants

for engagement and achievement.

Proprietary and Confidential © 2011 Maritz

We are: •Currently using virtual rewards in our rewards mix.

•Evaluating whether to integrate virtual rewards into our rewards mix.

•Not planning to include virtual rewards in our program.

28

Proprietary and Confidential © 2011 Maritz

Proprietary and Confidential © 2011 Maritz

Trans actions

Proprietary and Confidential © 2011 Maritz

actionsInter

Proprietary and Confidential © 2011 Maritz

32

• Low cost to produce

• Low cost to store

• Inexhaustible supply

• Can attach to any behavior

• Consumers and employees like them. A lot.

The upside of virtual rewards:

Proprietary and Confidential © 2011 Maritz

IntrinsicExtrinsic

33

MOTIVATION

Engaging in a behavior for its own value.

Engaging for the promise of an attached reward.

34

Virtual rewards have low and exceedingly fleeting extrinsic value.

The downside:

Instead, link them to behaviors with intrinsic motivators.

Proprietary and Confidential © 2011 Maritz

Status Quo

Status Quo

Disruption!

Disruption!

Habit

AWARENESS COMMITMENT INFLUENCE

Social Interaction – Autonomy – Mastery

Effort – Risk - Reward- +

RitualRitual

Proprietary and Confidential © 2011 Maritz

5 best uses for virtual rewards:

36

1. To show progress toward a goal

2. To acknowledge mastery

3. To indicate social connection/status

4. To enable online personalization

5. As a proxy for a tangible reward

37

38

Proprietary and Confidential © 2011 Maritz

39

2X Participation doubled over previous year

EE+ Four of 7 engagement outcomes are up significantly

Results:

115%Increase in overall recognitions submitted

40

Traditional Rewards

VirtualRewards

Big Data & Strategy

Proprietary and Confidential © 2011 Maritz

41

Mary LuckeyDirector

Reward Strategy

Barry KirkVice President

Loyalty Strategy

Questions?

Proprietary and Confidential © 2011 Maritz

Thank You

42