point reward loyalty system
Today, customer loyalty programs have been adopted by all businesses in the economic sector. The loyalty programs refer to giving prizes, offering discounts, and another similar incentive to the customers to lure them into maintaining their patronage to our business. Such programs are often cheaper as opposed to losing the customer to other prospective competitors in the industry.
Building a good and permanent relationship with the customers is the key to success for any organization. A good customer loyalty program helps retain existing customers, but it also helps to create new ones through referrals from existing customers. This helps an organization achieve its bottom line. A good example of a customer loyalty program is the reward point system.
Understanding the reward point system
The reward point system helps to draw your customers closer by letting them earn some points depending on the purchases that they make. The more the purchases that a customer makes, the higher the points that they are awarded. After attaining the limit points set by the organization, a customer can redeem them to get awards like free discounts, gifts, or the benefit set up by the organization.
The reward point system is quite easy to understand and apply in an organization. Every time a customer makes a purchase, they are awarded some points. For example, an organization can offer a point for every ten units purchased. This implies that a customer who purchases 100 units will get 10 points, which is much higher than one who purchased ten units. This boosts the customer’s loyalty towards an organization while encouraging them to purchase more units.
Characteristics of a good point reward system
A good point reward system should possess the following characteristics
User friendly
A good point reward system should be user friendly in that customers should be at a position to point balances, get updated communication on any changes, reward offerings, and provide urgent assistance to the customers when need be. Reward points should be easily redeemable according to the needs of the customer.
Provide open communication
The point reward system should provide an open room for communication between the business entity and the customers. Offer the customers all the necessary support and assist in helping them build their loyalty towards the business.
Should be well rounded
The point reward system should be all-round to all customers. Earned points should be in a position to buy awards that entice all-around customers. Offer a broad range of products from where a customer can choose. For example, provide merchandise, travel tickets, event tickets, and more. Delighted customers from the offered benefits are more likely to maintain their customer loyalty to the business.
Should provide a room for multiple participants
For a point reward system to have maximum outcomes, there should be inclusivity for all customers. Occasional customers can also be given some points at a lower rate, which at the end can work out and lure them to our business. Different groups, like the employees, can also be considered despite their differing objectives. This will play a major role in raising the organization’s profitability.
Calculation of reward points
The calculation of reward points is an easy task. Also, the task can be confusing since different entities use different equations to award their points. The customer needs to understand the equation applied by their entities to be able to calculate his points. A customer can later decide on the best method of using the redeemed point according to his interests.
Why use a point reward system?
The point reward system is widely accepted and used by businesses worldwide for various reasons:
Point programs help an organization to collect relevant data regarding the customers and the products that they mostly purchase, which is used as a forecasting technique.
The point rewarding system is more flexible and can easily be changed with the needs of the organization.
It is widely accepted by many customers bearing from the fact that it is simple to use
It helps an organization to reduce the marketing costs incurred. This is possible after leveraging the difference between reward points issued and the actual points redeemed.
Conclusion
Adoption and application of point reward systems have a direct positive impact on the organization’s profitability. An organization should always ensure that their customers are aware of the loyalty program to increase their loyalty. They should also ensure that the customers get their awards with ease after redemption of their points. With these, an organization can be guaranteed a win-win relationship with the customers and higher profit margins.