Ghosts, Goblins and the Fear of Over Rewarding


This time of year is a celebration of all things scary; from primal fears like darkness and creepy crawlers, to more theatrical fears like haunted houses or a zombie apocalypse. In the spirit of Halloween, we’re here to discuss the fear of giving away too much and “losing the farm.” In other words, the fear of over rewarding.

There are several reasons why business owners may be afraid of a rewards program. What if the bottom line is negatively affected or the program attracts customers who have no intention of making a repeat visit?

These fears are rooted in the business owner’s desire to see their businesses thrive, reward the right customers and keep operations running smoothly. While certain phobias require years of therapy, we recommend the following steps to overcome the fear of rewarding:

1) Think Big Picture: Assess how much you are actually spending on the rewards you are giving away. If you are squeamish about giving away rewards to begin with, it’s easy to mentally overestimate the costs. Don’t forget to calculate the money your reward-redeemers are spending past the cost of the reward/discount you offered! While rewards programs vary, we have found that our merchants’ loyalty program users spend 20-30% more per check.

2) Assess who you are spending that money on: Are your promotions primarily focused on attracting new customers (shift), or incentivizing 3rd and 4th visits from existing customers (lift)?

If you don’t have a focus- get one! It costs a lot more to acquire new customers than to farm business out of existing ones; plus 80% of most businesses’ revenue comes from 20% of their loyal customers. Focusing on new customer acquisition is riskier and more expensive. Don’t underestimate the value of rewarding loyal customers! Do this well, and they may generate shift for you.

3) Determine your budget: Know what you are willing to spend on customer rewards and stay within those boundaries. Remember that offering unattractive rewards/promotions because they are inexpensive is not helping you in the long run. It’s better to offer a limited number of great rewards (generating exclusivity) than to offer a plethora of rewards nobody cares about. Your rewards represent your brand: choose to be exciting and generous or exclusive rather than cheap and unimaginative.

Offering rewards your loyal customers care about goes a long way in developing an emotional connection to your brand. It’s the difference between making your customers feel appreciated, or making them feel lazily “sold.” Many businesses offer rewards programs, but only a small portion of these programs truly make customers feel valued by the brand. A quality rewards program can build a robust, loyal customer base and drive enough repeat revenue to more than pay for itself.

Fear is based on a lack of understanding. In this case, not understanding could be causing you to miss out on engaging with your customers and the long term payout of having made that investment.


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