Saturday, November 10, 2012

How to Ruin a Customer Rewards Program

Customer Rewards Programs were started to show appreciation to loyal customers and to retain them as customers. It's a good competitive strategy.

On Seinfeld, there's an episode where Elaine Bennis kept buying a sandwich at a particular shop because she wanted the free one, once she bought 10 sandwiches. Did she like the sandwiches? Not really. What she liked was getting something for free.

Once the idea of giving customers free stuff or discount coupons started to become popular, mediocre businesses tried to get in on the act. You know, businesses that just imitate successful companies, but only go half way. They wanted to appear to be generous, without giving much value.

So, here's how to destroy a customer loyalty program.

Provide two or more rewards coupons that are stupid....

* "free breadsticks to celebrate Mothers Day"

* "free lube job when you buy 4 tires and a new transmission"

* "free refills on sodas and unlimited salad bar for parties of 10 or more"

* "save 3% on day old donuts this Wednesday 2 PM - 4 PM".

Do something like that and most recipients will stop paying attention to your Rewards Program. They won't open the emails, won't print out the coupons, and won't visit your store or restaurant. 

You'll accomplish the exact opposite of what you intended. Your shabby Customer Rewards Program will drive customers to your competition.

Miserly discounts in Rewards Programs will communicate to customers: "We value your business...very slightly."

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