In Part 2, we discussed how you can use data to find out what makes your customers happy to form your rewards program. In this final article of our three-part Heartland Rewards Series, we’ll discuss best practices for building your rewards promotions.
It’s time to return to your customer research (not what they say, but what they do). This will help you determine what really drives your customers—some may be driven by value while others are drawn to sophisticated experiences. Knowing your market determines which relationships you want to foster.
While there are variables within each model, you can commonly reward behavior via:
- A discount card—Customers use a card at checkout that records transactions and qualifies them for future discounts on products or services. The traditional punch card fits here, but technology has made it easier to follow spending habits and offer targeted discounts based on habits. An example is a grocery chain rewards program.
- Reward points—This option is also transactional and may include a card, but the difference is that the customer accumulates points based on their purchases (commonly determined by dollar value) that they may use to buy products and services. This model is growing in popularity thanks to its ubiquitous use in the travel industry by airlines, hotels, etc.
- Experiential awards—The previous two rewards models are transactional-based. This model is built on event-based rewards. It’s been shown that experiences—rather than purchases—create lasting memories and affinity. Things like backstage passes to a concert or a VIP upgrade are becoming an increasingly popular way to reward loyal customers.
- Or a combination of models—Many national and regional businesses are experimenting with combining elements of these various models, offering discounts as well as rewards or targeted experiences to a particular customer audience.
Your type of business should help determine which option is best. Points make sense for services with high credit card transactions. For instance, restaurants that see a patron once a month might be better offering a free appetizer or instant discount rather than a points system.
Establishing a good rewards program requires picking the right rewards structure. Growing a good rewards program into a great one requires strong promotion, customer outreach and commitment. Investing wisely in marketing and training is essential to your success.
Make joining a no-brainer
First, determine how customers sign up and what’s required of them. Make this process as simple and seamless as possible. Do not charge a fee for joining your rewards program.
Limit the time and amount of personal information required to sign up. Handing customers a long form to complete will only lower adoption. Consider making it as easy as providing just an email or phone number—that’s enough to start your marketing efforts. Encourage people to sign up or complete their profile on your website, if possible.
The benefit of capturing more information is that you can personalize communications using a customer’s name, birthday and sign-up anniversary. To collect all this personal information, consider offering a free gift or starter points when your customers register their profile.
Mine your customer data
Despite the best intentions and planning, your rewards program will need to be continuously improved upon. “Set it and forget it” doesn’t work when it comes to building loyal customer relationships. Your program strategy should include a clear outline of how you will evaluate and evolve your program so it always resonates with customers.
Just like it did in pre-rollout, customer actions and data should be at the heart of any decisions about how to change your rewards program. Examine the data as soon as you can but give the program due time to gain traction before making sweeping changes.
Change it up when needed
Don’t be afraid to change directions with your rewards program. Your customer data, along with your broader research, will quickly reveal whether your program is not doing enough to engage customers.
There is no perfect answer, so be ready to experiment and test your options. You can use your email lists to try out offers or use a small slice of your membership to test new rewards options. If these experiments work, consider implementing them at the program level.
If you are considering implementing a rewards program but are concerned you don’t have the expertise to build the right model, seek out the assistance of a specialist.
An expert can help you:
- Build the right program based on realistic goals and business objectives
- Communicate a clear value and message across many channels
- Deliver the right message at the point of purchase through well-trained staff
- Optimize your program based on customer actions and data-driven decisions
Remember, a rewards program is not just about revenue. It’s about relationships. Everything you do should focus on building the customer relationships you want for your brand and your business.
Learn about Heartland’s Reward Programs
Part 1: What Can Rewards Do for You?