– Rewards
Coughlin’s Law – “Nothing is for free in this world. To get something, you have to give something.”
In the bar business as well as the online business, to get something, you will need to give something. Do you pay for advertising, advocates and a PR team or do you do it a different way? How can you get your customer to talk about your business, advocate your product and even promote you?
1. You can give your customer something of perceived value.
This token of perceived value is best when its something that cannot be purchased. Its best when this token can be earned somehow. The rules for this reward system can be published – a known system – or a random gift. Depending on your product or service or goal of your reward system, the manor in which you reward may vary. In the picture above, the gentlemen with the beer in his hand was celebrating his birthday. He was a good customer and just came in with a large crowd. Someone in the group said – “he needs a birthday beer”. Meaning he needed a FREE drink. The manager on duty thought for a quick second and told him, “Hey Charlie, come on back here and pour everyone’s beer for your birthday”. We charged the group for every drink that night. The token of appreciation, the earned reward in this case was being able to stand behind the bar and pour everyone in his party a beer. As you can see from his reaction it was much better then a free beer like he could have received at any other bar in town. He could not have purchased that reward and it was unexpected.
In the online world, this is done through a status symbol or a badge that the community member can show off to the rest of the members. This status then needs to equal something tangible for the person to see its value. Do they get exclusive content, can they turn in points to buy something, do they get to moderate the forums, guest post on your blog or something truely unique where they are able to direct your business (Adding in a touch of crowdsourcing here would be a nice touch)? The end reward once again is dependent on your crowd.
2. You can give your customer something they would not have purchased on their own
This strategy is another form of an up sell. When they are buying beer, why give them a free beer. The customer has been happy paying for beer all night long so why give them a free one. Offer the customer something they might not have thought of. Do you have a special, a new desert or a new menu item that you would like more customers to try? By doing this, you hopefully will turn them onto a part of your business they might not normally visit or see or taste.
Online, why not upgrade someone’s account to a premium member for great or frequent comments? Why not offer free shipping to someone who helps out in the product forums.
3. Make a game out of it
This is a popular strategy with a lot of businesses but not a favorite of mine. I think this draws the wrong type of customer to your business. The type of person draw to this reward system is looking for the discount period. They are not interested in the quality of your product not service. They are interested in the price. The basis of this system is you buy x number of widgets and you get the next one free or at a discount. Does the system work – Yes. You will get an increase in your business with this system but …. You will not develop a customer who will socialize your business and be an advocate like you want. They will not become a fan.
This system of rewards is also very easy to replicate online. When a customer creates an account and each time they log in, you can make it known to them how many more widgets they need to purchase to get the next one free or the free mystery gift.
My favorite is still number one – You can give your customer something of perceived value. To you, the business owner -brick and mortar or online – the token of perceived value could cost you very little and definitely a fraction of the benefit you will receive. The status of the reward received will go a long way with the customer or community participant versus giving them a percentage off their bill.
There is a bit of status and a bit of gambling that comes into play with this type of reward system. The person will let others know what happened to them and then others will hopefully look forward to the same reward by becoming a customer or community member. This is where the gambling part comes in. The new customers or community members want what the other FAN has. They will try and figure out the game and different things to see what gives them the best results. What gets them the reward the fastest.
In the bar business it could mean the person comes in frequently or they become a better tipper or they start throwing parties.
Online it could mean that this person becomes an MVP in your forums or they promote you on Twitter or Facebook or they blog about your product or service. If you could recognize this behavior early and track it so when the time is right, reward it without an expectation of the customer or community member, you hook them. Once they receive the reward of perceived value and they were not expecting it, they will work harder at trying to get another reward or move to the next level.
I believe a reward system that does not clearly define the rules for the customer or community member works best. You want them to work hard to achieve the reward and to try different channels to get that reward. Stay tuned for up coming articles on how to integrate a rewards and gaming system into your CRM system to turn casual customers into FANS.
How about you? What reward system has worked best in your business?
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Robert specializes in CRM, xRM, SCRM and SharePoint Solutions. Robert is a husband, a proud father and organic farmer