Why Your Loyalty Program Shouldn't Just Offer Discounts

Posted by Troy Leland on Fri, Jun 12, 2015 @ 07:32 AM


One of the biggest and most common misconceptions about loyalty rewards programs among business owners is the idea that they need to offer more discounts in order to motivate their customers to buy. This is one of my favorite conversations as we talk with business owners who consider the pros and cons of loyalty.  They say - 


"If loyalty is just about giving discounts, I can do that already.  I don't need to pay a loyalty program provider a fee for that"


We usually have a good laugh at this thought because it's TRUE!  Business owners wouldn't pay for a program that just reduces their margin.. or at least they shouldn't.  Thankfully, with loyalty programs that improve the visibility of special offers, this is not the case!  


Much of loyalty is about making customers aware of offers you already have.  We find great examples of this in our c-store client's programs. Before implementing a program, many c-store clients are already running a coffee club with buy-10-get-one-free punch cards and promotions on other beverages and snacks, like 2 for $3.


After we launch a loyalty program, these very same deals drive more sales as customers receive email and text communications about the offers on their mobile device.  In these cases, a loyalty program's success has nothing to do with discounting items that weren't discounted before, It's just about improving customer awareness so that promotions are more effective.


As we consult with our new c-store clients on loyalty promotion strategies, we first encourage them to look at the special offers they're already running and consider how customer participation may be improved through loyalty program communications, like email and SMS promotions.


To dive deeper into this topic, download our whitepaper for Ten Tips for Customer Rewards Program Success or click the "contact us" link on our web page to talk with us personally. 


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Tags: Loyalty Marketing