You’ve probably heard of rewards programs before. Your local coffee shop has one. Your grocery store has one. Maybe your local BBQ joint has one.
As a member of a rewards program, you receive special discounts and points towards future purchases as reward for your continued patronage.
Each program has its own set of rules, but they are all typically easy to join.
A lot of people use these rewards programs for the discounts they get as a result. Because they get discounts, they shop there more often.
For instance, at my grocery store, I get points towards their gasoline. Every 100 points gets me $0.10 off per gallon. I earn a point for every cent I spend in their store.
This is a great marketing strategy for businesses because it encourages their customers to buy more and/or use their services more often.
Some rewards programs have not come without controversy though.
But before we delve into this, let’s just concentrate on the basics of what rewards programs are and what they offer.
Rewards programs are a form of “club.” And you stay loyal to your club, right?
Members of these clubs frequent the stores where they receive discounts or points for shopping there.
Discounts are most often applied to their purchase at that time.
When points (or punches, like on a punch card) are given instead of discounts, the customer accumulates them to be used towards future purchases.
Most rewards programs are easy to join.
At a grocery store, all a customer has to do is fill out a form.
Most forms only ask for your basic information.
Once you’ve filled it out, the customer service clerk gives you a rewards card.
Some will supply a keychain sized “fob” card for easy access when purchasing items. If you don’t want to carry around a card, you can use your phone number as your unique ID to receive rewards on your account.
Getting your rewards is simple. There’s either a magnetic strip or a bar code on the back which ties into your account.
Some cards come with electronic “proximity” chips built in. When the customer is ready to cash out, they can simply swipe or scan their cards over the reader and the discounts or points will be automatically applied to their purchase.
If you’re using your phone number, you’ll enter it on a keypad (or tell it to the cashier) and your account will be pulled up and rewards applied. Frequent Flyer programs are also a rewards programs which offers its members access to exclusive dining lounges and similar other perks at airports they can enjoy during long layovers.
The members need only show their frequent flyer card at the door and they are allowed to sit in comfy lounge chairs, have a drink, eat dinner, and relax while they wait for their next flight.
Cards are becoming more and more obsolete, though (except maybe in the grocery store). Now, many rewards programs are apps you can download to your smart phone.
And this opens a whole new world of possibilities to connect more meaningfully and repeatedly with your customers.
We mentioned rewards programs are great for your business because they breed loyalty and encourage repeat visits to your place of business. This, of course, increases your bottom line and is a great reason for you to use them!
We can take this to the next level, though. Now, because rewards programs are on cell phones, often we can send a message to our customer.
We can call them to our business at will by offering something extra special.
And yet another level…
A lot of companies have begun using their rewards programs to store information about the customer and their buying habits with the data they collect when the customer buys items at their stores.
By tracking your customers’ buying habits, you can send them a VIP deal right to their phone targeted at exactly what they love.
This is target marketing: promoting specific products/services based on your customers’ buying trends.
You can also promote things related to your customers’ faves.
One of RedFynn’s partners, Pirq, does this. But Pirq also collects customers’ information through Facebook because about 96% of consumers sign up through Facebook.
Let’s face it, it’s easier than choosing a username and password!
Although there are rules about the information businesses are allowed to collect, there has also been some controversy over companies collecting data about consumer’s buying habits.
Different rewards program each have different ways to use consumers’ information. Customers should be supplied with all of the information when they decide to join.
The benefit to your business is clear: you can increase your profits consistently and steadily with a rewards program. Companies who track their consumers’ buying habits can more effectively target their customers and encourage them to buy more of the things they like. They can also encourage them to buy additional items.
Something special about that “second money!”
Some consumers have raised an issue about companies collecting this data about their buying habits. There has been an increase in concerns over privacy the last several years as technology continues to improve.
Because of this, companies have had to adjust their practices as it relates to storing and using consumer data.
Implemented effectively and with good business practices, rewards programs are a great way for both consumers and companies to benefit.
Who doesn’t love saving a couple extra bucks on your purchase?
And what company doesn’t like having a finger on the pulse of their customer’s wants and needs? The better to serve them with… and reward them for the good behavior of “shopping with us.”