A rewards program is simply a retail marketing strategy used to entice customers back by providing them with an incentive for their repeat business. Developing customer loyalty can be quite a challenge is this fast-paced world that has a seemingly infinite amount of options available.
The rewards program concept is based on basic psychology. The law of reciprocity states that individuals that are given something of value are much more likely to return the favor by giving something of value back. The greater the perceived value of the reward, the stronger the customer loyalty that will be created.
Retail businesses that want their former customers to return must be able to award these individuals with not only something that holds value, but also a reward that is relevant to the retail business itself. Too many businesses that use a rewards program make the mistake of providing an incentive that doesn’t make sense, even when that incentive has value.
The most effective rewards programs are those that continue to increase the value of the incentive with each ongoing purchase. Every return visit should be rewarded in some way, even from the very first time the customer comes back to the retail business. As the individual demonstrates a rising amount of customer loyalty, he or she should be awarded in turn with better and more exclusive deals, discounts, and freebies.
The retail business can move incredibly fast, with consumers deciding within minutes whether or not they will purchase again. Techniques in retail marketing that incorporate rewards programs work because they make returning consumers think twice about their future purchases. Fortunately, rewards don’t have to be costly or extravagant. Even awarding loyal customers with a 15% discount off of advertised prices or a low valued freebie item can be sufficient. It’s not about value. It’s about perceived value.
The competition between retail businesses is fierce. Any edge that a business can use can make the difference between success and failure. Retail stores have been using rewards programs for decades because history shows that they work in improving the percentage of customers that return and make additional purchases. The best part is that these programs are easy to create, and have a minimal amount of maintenance necessary to continue operating.
LoyaltyOne reaches out to your customers through retail marketing to gain customer loyalty to your company. Get the inside edge on how to create repeat customers.