Why Businesses should offer Reward Program Cards to Customers

By: Amy Nutt...


Since the online shopping boom erupted, competition for customers has been steadily increasing. Both online and traditional retailers have had to come up with marketing strategies to win customer loyalty. One method that is becoming increasingly popular is the use of reward program cards. Customers who have reward cards enjoy a number of benefits such as rebates in the form of earning a certain amount of points, discounted prices, a free item, and special coupon offers. Reward programs cards have proven to be a smart marketing strategy.
Reward cards can be paper constructed cards that are stamped or have a hole punched through it, or a plastic card that looks like a credit card. Plastic cards typically have a magnetic strip that is scanned when a customer pays for a product. The card registers the sale and the bonus such as points is applied to the customers rewards program. Information about what the customer purchased is stored in a database. According to a study performed by Boston University's College of Communication, eighty-six percent of American shoppers are listed in a loyalty database; a majority of survey respondents said receiving the card was worth giving up some measure of privacy.
Customers accumulate reward points to receive a free reward or discount. This can be in the form of a cup of coffee, meal, a retailers promotional item, discount on an item, a tank of gasetc. There are more extravagant rewards such as a free plane trip and hotel accommodation,
The reasons why businesses should offer reward program cards to their customers include:
1. Businesses can collect a customers name and address so they can send out information regarding their products and services. They can send flyers, special promotional deals, and newsletters. This allows the business to increase sales by staying in contact with their customers and maintain a relationship. They can also learn more about what their customers buy so that they can send out advertisements based on the customers personal buying preferences. Communication shows the customer that the business values them which will allow the business to stay ahead of the competition.
2. A reward program card will encourage repeat customers and increase the likelihood of acquiring loyal customers. Customers enjoy receiving rewards for shopping at a store. They feel valued and appreciated. This increases loyalty to the business and in doing so increases sales. A rewards card programs allows a business to build a large loyal customer base.
3. Reward card programs are very cost effective. For instance if a customer buys 10 cups of copy at $1.00 per cup and earns a free cup that only costs the retailer .50, then the business is spending very little to earn a bigger return. The best reward program will offer better rewards as the customer increases their spending. The customer should feel the reward is well worth returning to the store. When returning to the store, the customer will be more likely to browse and purchase another item.
There is a good reason why more businesses are adopting reward card programs. With such a program, a business will obtain and retain repeat customers, acquire an effective means of marketing a product, and increase sales. The money a company spends out on a reward program is well worth it because they see a much greater return on their investment. Because so many companies are establishing this type of program, it just makes sense for a business to acquire one of their own.

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