small business customer loyalty
Putting a Value on Customer Loyalty Rewards
So you’ve decided which rewards to offer your customers. First challenge down. The next thing to conquer is deciding how many points each reward should be worth. You want your customer loyalty rewards to be attainable and engaging without being detrimental to your bottom line. Here are 5 things to consider when assigning values to the awesome rewards unique to your business:
1. Average Ticket Cost vs Actual Item Cost
How much does the average customer spend each visit? Use this as a baseline to estimate how much a customer will end up spending in order to earn each reward. Let’s say your average ticket is $10 and you set a reward for a free soda at 100 points (20 visits). The customer would spend about $200 before being able to redeem that 100 point reward. Plus, that free soda may retail at $1.50, but really only cost you $0.06, so don’t make your member pay $200 to get it.
2. Available Inventory
Seasons change, fads come and go, and so does your inventory. Whether you're switching out fleece-lined leggings for skirts or pumpkin spice for strawberry, it's likely that you're going to want to make room for the new…and quickly! Add a customer loyalty reward that offers last season's item at a lower value. You could even pair it with a new item by using a "Buy One Get One" offer to get them to try your latest products.
3. Space Out Reward Values
Keep your customers engaged by spacing out the number of visits required between each reward. If the gap between customer loyalty rewards is too large, earning rewards becomes more of a chore and your customers will be less inclined to engage with your loyalty program. If the gap is too small, it’s not challenging to hop up to the next reward, which can affect engagement too. If you need a filler reward to bridge any gaps but don’t want to offer anything for free, feature an experiential reward or even throw in a reward that donates to a local charity or organization!
4. Customers Redeem the 10th Visit Reward Most Often
Our research shows that customers often save up their points and most often redeem customer loyalty rewards at the 50 point mark. With this in mind, ask yourself two questions: what am I comfortable rewarding my members with the most and is there a specific item that I want to to give them more of? You can stick with the tried and true, but maybe you have a new menu item that you just know your customers will love. Set that as the 50 point reward and get them hooked! Whatever the offer, your members have proven they’re loyal to you, so be sure to return the love!
5. Listen To Your Customers
At the end of the day, what really matters is that your customers are happy. So, ask them what they want and what they think is fair. Set up a Belly suggestion box and let them write in reward ideas and values. Or take to social media and ask them to post suggestions on your business’s Facebook page. Have fun with it and bring their ideas to life!
The point values for each reward are just as important as the rewards themselves. Whether you’re considering cost, inventory, or your customers’ wishes, remember that setting your rewards at the right values is a surefire way to keep your Members happy, loyal, and engaged with your loyalty program – just the way they should be!