Business owners always ask: “What type of rewards do businesses on FiveStars offer?” And the answer is always: “Every business is different, so their goals for motivating customer behavior is different.” That said, here are some ground rules that will help every business determine their best structure:
First, if it won’t motivate you, then it won’t motivate your customers! 5% off after 20 visits won’t motivate anyone. Giving an exact dollar amount as a discount or giving an actual item will generally be more successful than a percentage. Also, having an extremely simple way to earn points can be very successful. Rewarding one point per visit or per items purchased is the easiest ways for the staff and customers to understand how to earn and award points.
Another very successful strategy is to offer a tiered reward structure, i.e. having a reward available at 3 or 4 visits, and then offering larger rewards at higher levels. A good loyalty program doesn’t provide a discount for every visit, but generates a reward only after the customer has demonstrated loyal buying behavior.
The reward should have a good perceived value, but one that doesn’t necessarily cost the business much financially. Example: 3 points = free drink (1 cent beer, wine, or non-alcoholic drink). This will motivate the customers who want quick gratification to start coming in more often, and you’ll only be giving away a high markup item. You can then add another tiered reward at 6 visits and another at 10 (just examples). Since the customer will have to hold onto, and not cash in, their rewards to get to the next tier, the rewards should increase in value as the points do. Example: 6 points = free appetizer and 10 points = free entrée.
You can also motivate customer behavior by using the points creatively. By providing double point days and/or times, you can motivate your customers to come in more often during your slow times. Another popular structure is to have rewards for specific times of day. Example: 5 points = free lunch, 10 points = free dinner. Since the lower reward is for lunch, you will motivate more customers toward lunches. This can be fantastic for your business if your goal is to drive more lunchtime traffic.
There are many different ways for businesses to structure their rewards program. At FiveStars, we will not only consult you on ideas and possible reward structures that fit your business needs, but also provide you with backend analytics to make sure the loyalty program is making your business more profitable!