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Implementing a Robust Customer Reward Program


May 27, 2017 0 comments Customer Service

“The way to a customer’s heart is much more than a loyalty program. Making customer evangelists is about creating experiences worth talking about.” – Valeria Maltoni

A customer reward program is a product or service loyalty program run by a business enterprise. These programs are designed to attract customer attention, acquire new customers, and engage with customers at a deeper level. These programs are typically offered to frequent customers because and are meant to encourage more sales of a product or a service. Customer reward programs are of various types and typically offer free merchandise, reward points, shopping coupons, and advance previews of new products and services. Consider this: an airline that operates across multiple regions and different geographies may choose to reward frequent fliers with additional flying miles. Every hundred miles flown by a customer can translate into one point that entitles the customer to five miles of free flying. Once a sufficient number of points are allotted to a customer, the airline may offer a couple of free trips to said customer in exchange for the accumulated reward points. A robust customer reward program can therefore, be used to gain publicity by the said airline, and to forge a deeper and more meaningful relationship with frequently flying customers.

Points-based customer reward programs are the most common among modern enterprises. We have to bear in mind that a robust customer reward program is designed to lock in the customer into a certain product or service. This is significant because it helps to build customer retention in a market where acquiring new customers can be an expensive proposition for the business. Customer reward programs can also be viewed as an extension of the customer service protocols operated by a business enterprise. The special treatment, certain freebies, and the many discounts are all geared to serve the customer better through privileged treatment. We may consider the instance of a fast food chain that operates a customer reward program predicated on the customer dollars spent in its many stores. Every point gained by a customer can translate into a dollar and once fifty dollars have been credited to the customer’s account, the customer is entitled to a free meal of his or her choice. This simple points-based reward program has the potential to draw more paying customers to the fast food chain. In addition, customers that top the rewards program in every calendar quarter can figure in the news letter sent out by the chain to all its customers. Further, a certain number of points may allow the customer an opportunity to bring friends and family to the restaurant and enjoy special meals at a discounted rate. Therefore, a customer reward program should be consistently operated to achieve the desired effect.

An online retailer that operates a distinct business model should ideally craft its own version of a customer reward program. Online shopping has become common in most parts of the civilized world and therefore, such businesses deserve to reward their most frequent customers. The reward program may require interested customers to pay a certain annual fee in exchange for many benefits that attend their online shopping at the portal throughout the year. These benefits could include free shipping for all the product categories available for sale at the portal. Premium packaging, lower taxes, and priority processing also star as key benefits that accrue to customers that avail the customer reward program. The business case for such customer rewards is based on the fact that subscribers to the said program typically spend significantly higher monies at the online portal. Therefore, the online business values them as special customers and hence, the special treatment. The higher number of transactions from each privileged customer is sufficient to underline the business logic that justifies this reward program. We could say that this is a key instance of a robust customer reward program operated by an online business.

Co-branding is a different manifestation of a customer reward program. This approach does not hinge on a dollars and cents basis, but offers the customers an option to spend their money on similar businesses. Consider this: an automotive company can have a sub-division that deals in automotive tyres. This sub-division can announce and operate a customer reward program, wherein customers can avail a whole raft of automotive services (such as car washes, car servicing, car insurance, etc.) from select business partners that offer such services. The co-branding initiative is one example of offering discounted services to an automobile owner. The said businesses gain from the fact that the said automotive sub-division is sending a steady stream of customers to their doorstep. Meanwhile, customers are assured of superior and timely service standards, which translate into higher vehicle availability. This customer reward program can also lead to greater owner satisfaction and possibly, greater business volumes for the said enterprises.

Customer reward programs bring significant business benefits to the enterprises that operate these programs. A lot of information and data can be gathered from the expert operation of such a program. Customer demographics, preferences, complaints, and accolades can yield key insights into customer behaviour. These data points can be accumulated and assessed in the interests of creating future products and services. The said information can also be used to craft specific services for a particular customer demographic or for a particular region. Processing such information also helps a business to understand the disparities in customer spending in different regions. The root cause analysis can help to create insights into what works for a particular business, and what does not. This information can be used to re-set business strategies and business priorities, thereby gaining an edge on the market competition.

A business enterprise needs to create new goods and services and market these to its customers. The members of a customer reward program represent a target group for new product trials and new service tryouts. The feedback from such testing processes can be used to tweak and optimise the product or the service before these are launched in the public markets. A discounted rate can be attached to these products and services to entice more customers to enrol for the said tryouts. These actions enable the business enterprise to gain solid insights into new product development and aligning these efforts to market trends and customers demand. Therefore, the pilot testing of new products and services assumes fresh importance in the achievement of business goals.

In the preceding paragraphs, we have outlined the various methods to build and operate a customer reward program. Every business should try to optimise these programs in line with the particular conditions that attend its industry. Retail, aviation, hospitality, manufacturing, and high technology are some of the business domains that can operate such customer reward programs. The ongoing participation of customers should be roundly encouraged and the business data emanating from these programs should be examined in the interests of serving the customer through a profitable business enterprise. The business should bear in mind that innovation and upgrades are the key planks that are central to customer reward programs. These programs also help to build customer confidence in a business enterprise, lock in long term customer dollars, help the business to flourish, and in the ultimate analysis, to dominate the competition.

 

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