Have you noticed that just about every other television or radio commercial has something to do with rewards or discounts these days? The reward industry seems to be on fire. Does it really work for the businesses that offer rewards? Does it really save money in the long run for the consumer?Who started the Reward trend?
Reward programs have been around since the early seventies. Mostly offered by the airlines and later joined by the credit card and banking industry. Until 2001, more than 80% of individual reward memberships in the U.S. were registered by these two industries or a combination of both with the creation of credit card airline miles.
Sept 11th Changed Everything
What happened to the economy after 9-11 is another article altogether. The result was the American consumer was scared and holding on to their cash. The retail, service, restaurant and other industries were scrambling to figure out a way to get the consumer to break out of their caves and start spending money.
If it worked for the Airlines, Would it work for other industries?
Airline miles brought billions of dollars of revenue to their industry. Now faced with certain economic death, businesses other than airline and banking, were forced to take example and offer incentives in a last ditch effort to survive
Is it working?
You tell me. Here are some stats. Prior to 9-11 there were about 800 million individual reward memberships registered in the United States? Just 8 years later there are 1.8 Billion, which is approximately 14 registered reward memberships per U.S. household. The quantity of reward memberships has more than doubled in just 8 years. It is obvious that the consumer sees a great value in these types of programs. I cannot tell you what will be the stimulus 20 years from now but I can tell you that businesses that offer rewards today are seeing results.
If you are a business considering a Reward program consider the following
Rewards verses Coupons.
Coupons specifically in any type of food industry are a life source to get people to walk in the door for the first time. The intent of the coupon was to get them to your establishment and then woo them with your product. Unfortunately that’s just not enough anymore. Typically when this does not reveal the incoming crowd that the propietier was expecting he or she will offer more coupons, more often. This is a mistake. Coupons are great for getting someone to your establishment for the first time, however a poor choice of marketing for customer retention or repeat business. My advice is to get them there with the coupon and then sign them up to a solid rewards program. A customer that leaves after using a coupon left with much of your profit, a lesser value of your product (why should they come back and pay $50 for what they just got for $35) and without leaving any contact info for you to remind them later of a great offer. When a rewards card member leaves your establishment they walk out the door with points on their card (nearing them to a great reward) they still value your product for what it actually cost and feel smart for earning the points towards a discount. The reward member looks forward to your email specifically if it reminds them of how many points they are away from being able to redeem their reward. Don’t let your customer walk out your door without a reason and reminder to return? Coupons do neither.
Don’t let your program back fire
If you are a business considering a reward program, consider the unfortunate fact that some programs have already given Rewards a bad name. The consumer wants a simple, monetary and immediate reward. The programs that are fading are the ones that make your customer jump through hoops to get their reward. By the time they are redeemed they have wasted an hour of their time registering on-line, their spam folder is full of unwanted advertisements and they are probably so aggravated that it has actual detoured them from returning to your establishment altogether. The exact opposite of what you want.
The secret to offering a successful Reward program
If you want this to work, you must follow these simple steps
- Keep it simple
- The most sought after rewards are discounts
- The reward must be on the spot. If they have spent the required money to earn their discount, then give it to them. Although tempted, don’t make your customer return to get their reward later. A discount on the spot will get them to return.
- Establish email contact relationship with your reward member however don’t abuse them. No more than twice a week and that’s pushing it.
- Let them know you will not share their email address and then follow through with that promise.
The Entrepreneur Mistake
If you are an entrepanuer that owns a business don’t be fooled by your own personal perspective. Most entrepreneurs don’t carry a single rewards card in there wallet or purse. They don’t personally see the value in these types of programs. The reason is that most entrepreneurs have more money yet less time. Saving a buck here and there is not a big deal and spending the time digging for the card or tracking their rewards is just not worth it. They just don’t need the money that bad. The unfortunate result of this is that same entrepreneur will probably not offer a reward program in his or her establishment because of their not seeing a value personally. This is a mistake. Don’t base the need of a program by whether or not an entrepreneur sees value. Entrepreneurs only make up around 4% of the population. My advice would be to consider what the other 96% of the consumers want, and waive your personal view.
If you are a Consumer, consider the following
You can shrug off the rewards cards and pass them off as a gimmick if you want. The truth is that consumers are saving billions of dollars with these programs. To keep it simple and reduce the amount of cards in your wallet, first seek out programs of establishments that you frequent. Make sure the program is simple, the rewards are worthy and they won’t share your information. An important question to ask the establishment is “Will you automatically give me my rewards when they are due or will I need to track and pursue them myself?”I usually walk away from those. A great program is one that rewards you on the spot when you’re not expecting it, and more importantly didn’t have to ask for it. A good program will send you an update of how many points you have and how many you need to get your next reward. Figure out how to view your points on-line and then save it to your favorites. You will find that it’s not that difficult or time consuming after you are all dialed in.
In a Nutshell,
Like anything you need to weed through the not so good programs to find the one that fits you or your business. Overall if worked correctly, Rewards programs can be a benefit to consumers and establishments alike.