In today’s crowded marketplace it’s becoming increasingly difficult to stand out from your competitors and offer something unique to encourage customers to choose you over them.
So many companies are offering similar products and equally great customer service, therefore businesses need a way to differentiate themselves from the crowd. Offering exclusive customer rewards is a pretty great way to go about doing this!
What are customer rewards
Rewards are given out to customers as a thank you for choosing to shop with you, they can work wonders when it comes to making your customers feel appreciated and helping to develop a sense of loyalty towards your brand.
Customer rewards can be given out in many different forms, such as deals and discounts, freebies and giveaways, or gifts from third-party organisations.
Types of customer rewards
There are a number of different ways in which you can reward your customers, below are just a few of the main ways:
A points-based system is where you would essentially offer redeemable points (or credits) to customers, the amount you offer would depend on the amounts your customers spend. Points based loyalty systems can be hugely effective when used at scale. They provide customers with a tangible saving that they can measure and see. They create loyalty and encourage people to choose a business they have a points card with over their competitors.
Points-based systems are extremely popular and this actually causes a problem. Anyone can implement them and it’s extremely easy for your competitors to follow suit. There’s also a huge investment to take into account to set-up a points-based loyalty system.
This is perhaps one of the most commonly used schemes, whereby you offer a discount on your own goods and services to reward loyalty.
Product discounts are easy to set up and keep everything in-house. They’re also effective when it comes to speeding up conversions you want your customers to make. You know your margins better than anyone else and therefore can control the reward you’re offering.
However, discounts do quite commonly put your customers into a mindset whereby they expect discounts, it can quickly become a slippery slope to a customer base who feels the full price is too much. There’s also the impact on your profit margin to consider, even if you are careful and turning a healthy profit, it’s still lost revenue.
Gifts and freebies
Everyone loves free stuff, right? It might be your own products or services, some branded merchandise or something completely unrelated to your business in a bid to build some brand loyalty.
Freebies provide instant gratification and foster strong brand loyalty from the outset. It’s an effective way to create positive feelings for your brand as free products and services provide a strong emotional output. Personalised gifts can also serve as marketing tools.
However, free gifts aren’t actually free, someone has to foot the bill and that would, of course, be you. Any good loyalty programme will be ongoing, and over time the costs of free gifts can start to add up. It’s not a fully scalable solution as the more customers you gain, the more you have to spend.
A perk based system means giving your customers access to a suite of favourable discounts from brands that matter to them. The perfect example of this is PERX itself!
Perk rewards present your customers with a wide variety of discounts from other brands they feel strong emotional connections with. By providing these as perks, you can actually psychologically gain some of the brand loyalty from those offering discounts.
It’s an ever-present solution that gives you the opportunity to keep an ongoing conversation with your customers as you tell them about new perks. Costs aren’t dependent on the level of usage, which means that your customers can use it time after time, as many times as they want without your costs mounting up.
Benefits of offering customer rewards
Offering your customers rewards every now and then can go a long way to increase customer loyalty. Below are just a few of the many benefits of offering customer rewards…
Increased customer retention
Rewarding your customers can work wonders for increasing your retention rates. With customer acquisition costing 5 to 25 times more, the value of retaining your existing customers cannot be overlooked.
Your existing customers are more likely to make a sale since they have a demonstrated interest in your products. Studies have proven that the probability of converting existing customers is 60-70%, whereas the likelihood of converting a new prospect is only 5-20%.
Therefore, rewarding your customers can go a long way to boosting your profits and reducing your marketing costs.
Build personal relationships
The first step to building an emotional connection and brand loyalty is showing your customers that you truly value them, this can be done by offering rewards. By maintaining excellent relationships with your customers, you can grow your business significantly through repeat purchases and word of mouth marketing!
Attract new customers
Rewarding your customers can go a long way to help attract new customers. If a potential customer sees a brand offering a loyalty program with great customer rewards, they are more likely to choose to shop with that brand in order to gain rewards. Additionally, customer rewards can help to differentiate your brand from competitors and make it more likely for potential customers to choose your brand over another.
Create brand advocates
Giving your customers rewards can help to create brand advocates. Brand advocates are the most valuable type of customer since they spend money and help to generate it! Brand advocates refer your brand to their friends, family and maybe even their social media followers, helping to bring in new customers.
Find out how PERX can help your business to reward your customers and build brand loyalty. Fill out and submit the form below to book a demo for our unique white label rewards platform.
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