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Developing a rewards program that will encourage customers to buy more – and more often – requires a bit of planning and evaluation, informed by an understanding of what motivates your customers. Our team of experts came up with the following six recommendations to help get you thinking about your rewards program.
1. Keep it simple. The top two reasons why consumers continue to participate in a loyalty program are: that it’s easy to understand (81%) and the rewards and offers are relevant (75%)
It needs to be easy for your customers to understand, along the lines of "Seven visits earns you a free six-inch sub on your eighth visit." And it should be easy to sign up and participate. If your rewards customers have to do mental math to convert points to dollars or percent discount, you'll likely lose them – if they ever sign up in the first place. Your rewards program also must be easy for employees to implement. Your POS should be pre-programmed for rewards redemption and integrated with your loyalty/rewards program. And be sure to train everyone. Servers or cashiers shouldn't have to call over a manager when they need to redeem a reward.
2. Balance happy customers with happy budget by going for high perceived value with low actual cost. Think about the perceived value of the reward in the consumer's eyes. A free soda or a free cookie may not appeal as much as a free sandwich or appetizer. You can provide a high-perceived- value item such as a sandwich but still manage costs. Specify a turkey sandwich as the reward if turkey is your lowest cost meat ingredient, for example. The perceived value is still high, but the lower cost of goods doesn't eat into profits as much as a higher cost ingredient or item.
3. Get buy-in from all levels of the organization. If you have executive leadership and/or a board of directors, pitch your rewards program to them, and ask them to communicate their full and complete support down the chain regularly, and often. And, of course, get buy-in from your front-line servers/cashiers and other staff. After all, they serve as both the face of your rewards program and your primary sales team.
Think about ways you can generate excitement and buzz by doing some internal marketing. And run some fun but simple sales contests, with nice valuable rewards for employees who get the most signups. Finally, consider how you can make your rewards program part of the ingrained culture. Maybe you'll need to send reminders so that it is talked about in weekly, monthly, quarterly and annual meetings. Finally, at the store level, you'll need to be sure your program is part of new staff training and that managers mention it almost daily with staff.
4. Know your customer and what motivates them. What are buying habits of loyal customers? How do they purchase? And what would it take to get them to visit one more time per week or per month? Or to visit on the weekend, when they are already loyal weekday customers? Or to spend an extra $3 or $4 on their next several visits? You can do a lot of research on your own. You can even buy research data. But chances are, you can think of 10, 15, or more customers who fit the profile of the loyal customer. They may have even shown you what would get them to spend a little more or visit more often, like the worker who buys himself a pastry with his morning coffee every payday.
5. Consider mixing up your rewards. For example, think creatively around seasons, holidays, sports, and even weather forecast. One California chain eases the pain of a rainy day by giving rainy-day customers an extra 20% in rewards points added to their loyalty card, to be redeemed on a future visit. Another chain gives points based on the number of points the local football team scores.
6. Consider cost versus return. If the reward doesn't appeal to customers, or if there is too much of a lag before they get a reward, you won't have much interest. This is where working with a knowledgeable partner in the loyalty and rewards space can be invaluable.
Each business and each set of customers is unique, but this list should help you get started on your own rewards program, one that hopefully will create a deeper connection and give customers a more personalized experience.