Over the past decade, as online shopping has grown in popularity so has the customer reward program. In an effort to encourage more repeat sales, retailers all over the web – and the world – have started to offer points-based systems. These allow customers to earn rewards or even cash toward future purchases just for buying something from a store.
While the underlying purpose of these programs is obvious – to boost customer loyalty – the truth is they often do the exact opposite of that.
In fact, if done improperly, rewards programs may even turn a customer off to a brand.
It’s true: Retailer reward programs have the power to create long-term customer relationships or actually prevent them.
How the Reward Program Can Go Wrong
It may sound weird that a reward program may actually push customers away from your brand, but I promise you it happens – and a lot more often than you’d expect.
Here’s the scenario: You offer customers points for every purchase they make. Say Sally buys two shirts from your store. She gets 20 points per shirt. At the end of her purchase, she finds out she has earned 40 points.
But to turn those points in for a reward, she needs a minimum of 50 points.
That means she’s merely 10 points away from something free … and who doesn’t love freebies?
Though you’d think this would make Sally say, “Great! When I buy a new bathing suit this summer, I’ll use this shop and get the reward then!” That’s logical. But is everyone logical? Definitely not.
In reality, you leave Sally thinking “They do that intentionally. They make their shirts 20 points each, so you have to buy a bunch in order to qualify. That’s how they get you!”
Even if her purchase arrives quickly and Sally loves the shirts, she’s still likely to leave your store with a bad taste in her mouth. You tried to con her. You tried to get her to spend more money than she should.
Now, I’m not saying every shopper thinks like this or even that rewards programs can’t work. The moral of this story is that you need to know your customer first. How much is the average person going to spend? Are your products something they will need to purchase often or just once in a while?
You don’t want to make your rewards too hard to come by. In fact, if you can help them get a reward on their first purchase, you’re even more likely to get repeat business after that. That’s definitive.
You also need to be careful about how you advertise your rewards programs. Make sure customers know about it – and the rewards you’re offering – before they make their purchase, and be very detailed in describing the system and how it works.
Poorly articulated programs will only make your customers feel ripped off and frustrated!
Implement the Right Program
Rewards programs can certainly work, but they’re not for every brand. If you’re looking for a way to inspire customer loyalty and foster long-term buyer relationships, let Haley Brand Intelligence help. We can craft a customized solution that can help your company reach the right buyers in the right way. Contact us today to talk.