Have your sales hit the doldrums? Maybe you’re not giving your customers a good reason to buy. If you’re looking for a smart way to stimulate sales, consider initiating a customer rewards programme. Rewards programmes give your best customers a reason to spend with you instead of your competitors. And an effective programme will strengthen customer relations and build long-term revenue.
Here are five tips for putting a customer rewards programme to work in your growing business:
1. Start by building a database. Every good retention programme begins with a database of customers who share information with you during enrolment. But that’s just the beginning: by compiling customer data throughout the life of your programme, you can tailor your offers based on customers’ past preferences and purchase histories. If your original database contains a large number of lapsed customers, offering an instant reward on activation (when they make their first purchase) is a great way to bring them back.
2. Raise customer expectations. The best programmes build excitement by letting customers know exactly what rewards they can expect and how they can earn them. For example, suppose you were shopping online, and one site promised future savings if you signed up for a rewards programme, but it didn’t convey exactly what you might earn, while a second site offered a gift with purchase at enrolment and a bonus with every third buy.
3. Offer graduated rewards. To stimulate maximum participation in your programme, make your rewards readily obtainable. Graduate them so that you transform a higher percentage of your database from low-value to high-value customers. This will help you avoid the pitfalls of programmes that reward primarily on enrolment, which tend to attract low-value price-switchers who join to take advantage of first-time buyer rewards. Graduated rewards can also energise sales of your higher-ticket items, including those that customers might otherwise consider to be out of reach.
4. Provide in-kind rewards. Suppose you owned a neighbourhood music store. Which would compel customers who earned rewards to come back and buy from you, rather than the superstore around the corner: two free movie tickets, or 20% off on their next CD purchase in your store? The bonus on their next CD would bring them back to make a subsequent purchase. It would also make the programme itself more memorable because the reward would be associated directly with your product. Best of all, the 20% discount would represent real value from the customer’s perspective, while your cost would be minimal.
5. Create an ongoing dialogue. Follow the example of major online and offline retailers by communicating often. Many successful cataloguers immediately send follow-up mailings after each purchase. Online marketers can communicate frequently to introduce new perks and special offers, thanks to the affordability and quick implementation of email campaigns. And brick-and-mortar retailers can enrol customers at checkout and then communicate about rewards via email or direct mail. Since customers are actively interested in news about their rewards, they are receptive to maintaining ongoing interaction – which ultimately leads to more sales.
The data you collect by virtue of your rewards programme can also help you improve your customer acquisition results. Just take what you learn about your best customers and tailor your marketing approach and media to address prospects with similar characteristics.