Customer Reward Schemes – Using Targeted Generosity

  • Posted by admin 18 Jun

Customer Reward Schemes – Using Targeted Generosity

I am sure we’d all agree that with a properly implemented loyalty / reward program, you can keep customers coming back for repeat purchases; when done wrong however, they can be a huge waste of time and resources as customers will not behave in the desired manner to meet the company objectives. Then again, we know that everyone (including me) loves free stuff so the question is, ‘How can we get our programs to be perceived as valuable for customers?’ right from the start.

In our competitive environment where customers find it easy to switch, loyalty schemes are effective tools to aid in the increase of customer retention and thereby increasing your bottom line. To do this, you need to recognise and reward customers that have behaved & continue to behave in a certain way – either by saving you money or increasing their spend with you. Using 2 clients of ours as a case study, the first client gave his customers bonus enrolment points and the other didn’t (going against our advice) – their customers simply had to enrol and then based on their transaction behaviour, get upgraded to the next higher rewarding tier. Both clients had similar reward rates; Interestingly, the client with bonus points recorded a higher number of customers enrolling on its program and transacting accordingly to get upgraded to the next tier, while the other program recorded a 40% lower customer enrolment and less than 50% of its customers doing the necessary transaction levels to get upgraded.

This example emphasizes that a bit of generosity that gets people closer to achieving a goal, the more effort they’d put in to achieving the goal. So targeted generosity has a great role to play in improving customer motivation because it gives customers the feeling that they have already scaled over the most challenging aspect – Starting.
So to ensure that your program is a gift, you need to ensure that:

1. You know your customers
2. You set clear and realistic goals for your customers to achieve and progress
3. You help them start by providing a bonus

For clients considering tiered programs, your program must offer differentiated products and services to customers based on their purchasing patterns and profitability. HNI customers should be provided with differentiated offering from the bottom tier etc.

Loyalty schemes can also be used to win back lapsed customers. These customers are much easier to win over than cold prospects. They know you and you know them, their buying history and where and how to reach them.

Thank you for your time this week, I do hope we have learnt a few tips from this. Please feel free to reach me directly on should you have any questions or comments.

Best Regards

Post Comments 1

  • Jun 29 2015
I love your write up.

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