Trend Watch: Loyalty and Reward Programs

October 9, 2012

75% of consumers belong to at least one reward program.

The most valuable assets a company has are satisfied customers. That is why companies like Southwest, Best Buy and PetSmart all have a loyalty or reward program for their customers. Why? They know what we all know; the best way to make extra income for your business is by appreciating the business you already have. I know in my office, we look at Best buying first when purchasing electronics, because their Reward Program has benefited us. Ask yourself this, are my customers feeling appreciated and motivated to use me again or has my company been quickly forgotten? If the answer is quickly forgotten, a reward program may be just what your company needs.
Loyalty or Referral programs are a way to not only keep customers coming back. Current customers will recommend the business to other potential customers. Usually these rewards cost much less than marketing to new customers and creates a higher ROI. But do all reward programs have to be as involved as Southwest or have a special card to work? We say No!

Want to create an effective referral program for you company? Here are some ideas:

1. Strive for excellence. Giving the client the best possible experience is the # 1 way to get clients coming back. They want more value than they were expecting, don’t we all? There’s an old saying, “the best advertising is word of mouth.” There is no actual reward for the client except the satisfaction and pride that they chose a company to work with that was excellent.

2. Be unique. My daughter’s orthodontist has a fairly basic waiting room that only stands out because they have pads for the kids to play on while they wait. My daughter’s friends were all talking about the “cool waiting room”, and she didn’t want to go anywhere else when it came down to choosing an orthodontist. So, are we saying a $500 pad created a $5000 client? Not solely, but it sure had a part in the decision.

3. Create a Win, Win situation. Everyone is busy these days, and unless you have done #1 and #2 above very well, then even if the customer loves your business, they aren’t likely to volunteer a referral. Ask yourself, would the referral program you’re offering be worth your time if you were the client? Then ask yourself, “Is the reward our company is offering so good that it will eat up any type of profit?” Research and analyze your referral program plan and find the right balance.

4. Simple is the name of the game. We have all had the credit card with the crazy reward program that would require a degree in economics to fully understand. Don’t do that! American Express has a huge client following because there point system is easy to understand and use. If the reward requires too much effort, the client is going to say it is not worth their time and move on.

5. Encourage staff buy-in. If your reward is too hard to understand or seems like a rip-off to your staff, it will be hard to make your customers think it’s a good deal for them. Train your staff on your offers and help them to see the value. Encourage input from them on ways to improve the program. After all, they are the ones in front of the customer. Anytime an employee feels a part of the development of a program, there will be more participation involved.

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