Are these Customer Reward Practices Hurting your Profits?
If you are like most business owners, you cringe every time a customer leaves your store upset. With customer acquisition costs being a staggering five times higher than keeping a loyal guest in the first place, it becomes worth it to worry about the details. To keep people happy, some business owners implement generous loyalty programs. Unfortunately, if these programs aren’t properly designed and carefully managed, they might be eating away at your profits. Here are three mistakes businesses make when it comes to customer reward programs, and how you can avoid damaging your own company.
Not Using Unique Identifiers
Those punch cards might look great but if you are using simple round hole punches to mark purchases, you might be setting yourself up for disaster. If dishonest customers can easily duplicate marks, punches, stamps, or proof of purchase slips, they might get more than their fair share of free loot. To ward off theft, always use unique identifiers like custom punches or stamps. Although custom marking tools might cost more than their generic counterpart, the money they will save you will outweigh the original investment.
Unique identifiers should also be used on any coupons or paper deals you offer. Have expiration dates clear on coupons, and color them by date so employees can easily tell if they are using a valid one. You can keep things more secure online with passwords, codes and captcha. For example, a Nordstrom promo code should be unique to the customer and the place they retrieved it from. This way online shopping can still be rewarding for customers and still save you money.
Failure to Train Employees
Unfortunately, custom stamps won’t help you much if your employees don’t understand the loyalty program in the first place. If one of your workers has a tendency to misread totals or likes to give out extra marks, you might be losing money each time that person works. If you implement a loyalty program, take the time to train your employees. Conduct blind audits occasionally to check for compliance. For example, send a member of your family through with a punch card to see how the worker handles their total. If you find issues, talk with the offending employee.
Getting Too Stingy With the Fine Print
Nobody likes to reach the end of a loyalty card, only to be confronted with a barrage of exclusions. Unfortunately, if you get too stingy with the fine print, customers might get fed up and walk away—forever. Make sure your program is as clear to your customers as it is to your employees. Try to create programs that are easy to start, simple to follow, and that offer lucrative returns. Research has shown that customers who start loyalty programs gain momentum as they rack up punches, which might you’re your own business booming.
You can’t please everyone, but by identifying problems with your customer rewards programs, you might be able to protect company profits without angering any of your valued clients.
Image Courtesy of Flickr.