Can reward programs work for smaller businesses?

Traditionally, when we think of reward programs, things like Tesco Clubcard, or Superdrug reward card comes to mind. Being fairly large businesses, it makes sense that these companies have the money and resources available to spend on fancy reward schemes, in order to engage present customers and, most importantly, reward and maintain loyal customers.

However, there is absolutely no reason why reward programs can’t be used for smaller business – provided they are scaled down. In fact, they can even play a crucial part in establishing a business and building a base of loyal buyers.

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How it works on a Large Scale

Traditionally, large brands are associated with having equally large reward programs. Not only can they afford to give away a lot of products and invest in plenty of advertising, but they also spend a lot of time gathering information based on the reward program data, so as to improve them.

For example, if customers are using a reward card to make purchases, the company can then glean and collect the following information:

  • How much their customers are spending
  • How frequently they purchase
  • Customer spending patterns

By analysing the data gathered it is also possible to notice patterns in customers’ spending habits, such as how susceptible they are to product offers. All this information will ultimately influence the company’s future reward schemes, who they target with their marketing, and how.

So that’s how the big brands do it, but surely this is impractical for smaller businesses? Fear not, as small businesses can be just as effective with their reward programs as their large scale counterparts.

Points mean prizes

We’re all familiar with the classic points card. Put simply, the customer produces this card with every purchase and builds up points over time. A certain amount of points and the customer receives a complimentary reward.

There are two types of points reward program that your business can adopt:

The Coffee Card Style: Like Costa or Waterstones, you can stamp the card after each purchase and when the card is full, the customer can receive a free product.

Tiered Reward Program: With this program, customers are encouraged to spend more by multiple rewards as they go up the tiers e.g. spend this much and you will get this reward, spend a little more and you get a bigger reward and so on.

Personalisation

This is the Holy Grail term of business. For small businesses, this is a time to shine as having fewer customers than for example Amazon, which has millions, means you can personalise your offers on such a level bigger brands are unable to.

In store:

Naturally, your employees will get to know regular customers who come into the main store. The ‘extra mile’ reward scheme could be opening a new till for anyone with a reward card to come up to and avoid queuing. Waitrose has had a reward scheme in place where Waitrose card holders got a free cup of tea in their cafe.

Shopping patterns:

On a smaller scale than the bigger brands, who have whole departments to do this, you can keep track of which customers buy which items regularly. Alternatively, looking at your numbers and working out which products are selling quickly can give you an edge in providing offers.

Offering exclusive discounts to your reward program customers – particularly products they regularly buy or products that suit one another – shows you not only appreciate their custom but that you recognise them as a person – not a consumer.

Giveaways

Giveaways are one of the oldest tricks in the book. Everyone loves a bargain, but even better than a bargain is a freebie.

Sign here:

Consider giving a free product to customers who sign up to the reward program. It acts as a taste for things to come and gets them used to the idea of being rewarded for shopping with your business.

The National Trust offers to reimburse customers their entrance fee if they sign up to Membership on the day of their visit. Whilst this might not work for large purchases, consider offering a 10% discount on a customer’s shopping when reward customers earn a certain number of points, or purchases. Even an introductory offer for first time shoppers can get them through the door!

A date to remember:

Special Occasions can also be used. Easter, Christmas and New Year are all calendar dates where your reward program customers can receive an appropriate free gift or product with their shopping.

Teamwork

It may seem counterproductive to be working with other businesses – aren’t they your competitors? Some of them are, but remember your suppliers are a business. Making friends with them could mean getting a better deal on products you include in the offers to your reward program customers.

Alternatively, initialising a partnership with a company not obviously linked with your business can open doors to new ideas and avenues for trade. For example, if a business sold tea, they could offer reward scheme customers a discount on a Thai massage at the local beauty parlour. There is a slight link between the two in terms of exotic options, but not an obvious link.

Partnering and including goods & services other than your own can help your reward offers appeal to more of the customers that subscribe to your reward program. This partnership benefits both companies – and the customers – so everyone wins!

Trial by taster session

Make a big deal of your loyal customers by giving them exclusive access to new products before they ‘officially’ go on sale.

Consider also putting on exclusive events for loyal customers. You can make these relevant to your business for example a cafe could put on a coffee crash course evening. Spending a little money on an event can boost customer faith in the reward program as they get a very literal benefit through an experience rather than another bargain.

These can work for long term as well such as setting up a Reward Program book club or regular meet up session for people to socialise – you can use your own products at the meetings too for extra advertising.

App-tastic

You don’t have to be a big brand with loads of money to make a great app. Aside from helping to draw in more customers this can work well for a reward program:

  • Loyal customers can receive promotional codes
  • Updates on new stock ahead of public advertising
  • Notifications on when customers have enough points for their reward

Conclusion

Small businesses can get just as much out of a reward program as bigger brands. Make the most of being able to directly target your customers and develop a reward program that will make your brand a success.