How to Decide What Types of Rewards to Offer Your Best Customers

Customer loyalty programs are powerful CRM tools, largely due to the flexibility they provide. With easily accessible software, you can now choose how you want to structure every aspect of your programs, down to the finest details including types of rewards, store specific promotions, and targeted marketing initiatives.

There are an infinite number of options for rewarding your customers. Depending on the type of business you run, the type of customers you target or the type of behavior you want to encourage, you can carefully select the rules and features that get the results you crave.

To help you get a better idea of which loyalty program benefits will most excite your customers while still addressing your business goals, here are a few of the most common:

types-of-rewards

Product Based

The most obvious use for a rewards program is to have a customer trigger a reward when they buy a certain product.

For example, when an auto repair shop performs a complete tire replacement they can offer a discount towards other services like an oil change. If the repair shop has a lot of business doing small, cheap services like oil changes, then it makes sense for the reward to be linked with getting a more expensive procedure performed. This program could encourage customers to think of the shop when they need major work done, not just small, quick services that do not generate a lot of revenue.

A nearly ubiquitous version of this program is the cash back rewards model. Customers who make purchases with their loyalty cards get back a percentage of their purchase that’s automatically added to their card balance.

People are encouraged to use their card for more purchases and they can be driven to purchase certain products based on the potential rewards.

 

Time Based

Offering a discount for an eternity could possibly cause the overall perception of the product to be devalued. For example, many USB flash drives retail for as much as $39.99 USD, but since many consumers are used to seeing such products on discount for $9.99 USD or less, their overall perception of value for that market has become skewed.

To prevent such a problem, a loyalty program can put a limited timeframe on a discount. It can be recurring, such as a restaurant deal during lunch time or a cheaper rate for bowling on Tuesdays. It can also be for a limited time, as in a sporting goods store that is selling footballs at a discount to promote the African Nations Cup in the months leading up to the tournament.

These time-based discounts can achieve three things:

  • Recurring discounts prompt customers to think of the business on certain days. For example, a restaurant that sells 60 cent chicken wings on Wednesdays could prompt a family to think of that restaurant first, should they decide to go out to eat on a Wednesday
  • Create a sense of urgency. Limited promotions encourage action and simultaneously punish non-action. Anyone who missed out on an excellent “Cyber Monday” deal for a laptop they wanted is sure to pay more attention next year.
  • Bring awareness to a product or line of products. In the football example, a retailer who sells mostly clothes but not recreational products could spark more sales in that department after a successful time based promotion.

 

Card Holder

This type of loyalty reward can either apply to members of your paid loyalty program, people who opted to receive a card in an unpaid loyalty program or a sweeping demographic of people in general.

Many office supply stores grant discounts to teachers, for example. Other stores and restaurants give discounts for people who work in armed forces or are currently university students.

A program such as this can bring in certain action-prone demographics like students. It can also be a way to demonstrate relationships with your customer base by reaching out to those who perform a service to the community.

As for literal card holders, either paid or unpaid, the customer gets to feel as if they are a genuine “member” of something. They may be more inclined to visit a certain drug store, for instance, than to shop at a grocery store where they do not have a membership.

One of the best features of a membership card program is that it is an easy way to call up a customer profile every time they make a purchase. You can attach data to their account and monitor spending habits, giving you valuable insights into behaviors.

 

Goals Reached

Most “points based” systems are encouraging customers to accumulate enough points to trigger a set reward. It can either be a free product, a discount or a unique offer only available to seriously loyal customers.

For example, beauty brand Julep has their “Mavens” club where members receive a customized box of discounted beauty products every month. Money spent earns “Jules” points towards free products. To generate buzz and give customers something to aspire to, Maven has set a reward of a brand new Mini Cooper car after accumulating a whopping 1,000,000 points.

Goal programs add perceived value to purchases. Not only does this feeling encourage choosing one business over another, but a customer that has almost reached a goal may be impelled to make purchases just to push past the goal post.

 

Birthday

Who says that time based rewards have to apply to everyone at the same time? Many places give customers a reward on their birthday as a way to say “thank you” and make them feel special. US-based ice cream company Ben & Jerry’s offers a free scoop of ice cream to customers on their birthday.

These promotions create a direct connection with customers, and they can also serve as a form of grassroots marketing. People receiving a birthday “gift” may take others with them when they go to receive it, or they could post about it on social media as a part of their “special day.”

 

Minimum and Maximum Spend

This feature is usually applied to product based rewards to help drive certain behaviors. Minimums encourage customers to add more products in order to receive a discount, such as Amazon.com’s free shipping on checkouts higher than $25 USD.

Maximum spend caps prevent customers from “gaming” your system, such as cutting off a cash back rewards for times that a customer is going to spend a lot of money on something like a mattress. These rules keep your business from bleeding revenue as a result of promotions.

 

Buy This and Get That

One of the simplest programs, buy X get Y means that customers get a free or discounted product upon purchase of another one. Common examples include a beauty product store that gives away a free hand sanitizer with purchase of a lotion, or commonly-seen “buy one get one free!” promotions.

These programs can help promote certain items, or they can drive customers to purchase an item in tandem because they receive a discount. Another benefit is that they can add perceived value to a purchase by giving away something of insignificant value, such as a free pen.

As you can see, there are tons of options at your disposal. Since many of them can be mixed and matched, the combinations are practically infinite.

We can help you determine the program that would get you the results you want if you wish to contact us. Otherwise you can take a peek at the rules generator yourself by looking at our features page and signing up for a free 14-day trial today.

With The Loyalty Box software, you have everything you need to massively increase customer retention so your stores stay chockablock all year round.