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Rewarding customers is an age old practice, firstly used in 1793. Rewarding customers is one of the best ways to make them feel valued, create emotional bonds and loyalty in customers. Though usually these rewards are cheap or something for nothing, even then they are being used and do work. From airlines to clothing stores, every business uses certain kinds of rewards under their loyalty program. With time as the loyal customers play out they may become brand builders for the business, as they bring new customers through referrals.
With change in time, rewards too have changed as per growing expectations of customers, innovation in technology and competition in the market. Approaches may be different but the basic idea behind rewarding is to create customers loyalty.
But rewards what are suitable for one business might not be as effective for another business and hence comes various kinds of rewards and loyalty programs
A few centuries ago, a merchant started giving copper coins to his revisiting customers and they used to redeem these coins for further discounts. This helped him to get permanent customers in his business funnel.
Point rewards is the extension of this old age technique, where customers earn points for every purchase they make with the business and after reaching a certain point they can redeem these points for discounts.
This motivates customers to shop more from the same business as they get additional value of points and discount while paying just for the purchase they make.
“Cash” itself gives satisfaction and value unlike any other thing and hence the most effective and popular way of rewarding is providing Cashback. It refers to returning a certain amount of payment back to the customer in the form of cash or its equivalent.
Cashbacks are easiest to understand and maintain, as it doesn’t require any complicated calculations and is widely accepted by customers.
Only con of cashback is that usually it is generalised for all customers, i.e. the factor of amount spent gets no consideration and incentive amount for all customers is the same.
This reward system gives consideration to the bill amount & frequency of shopping of the customer. In this system the customer gets reward or points after reaching a certain milestone. For every level or tier there is a differentiated reward or benefit for the customer.
It usually motivates customers to keep shopping and engaging more with the business to unlock next milestones, as it creates kind of gamification and motivation to reach next level.It makes most valuable customer feel the most valued.To business it gives economical and feasible rewarding system to business, as the rewards are differentiated for different customers, bill amounts and frequencies.
It is one of the old and traditional way of rewarding, in this system companies would give punch on paper when they shop, and these paper after reaching certain punches can be redeemed to get discounts.
Though this system gives a feeling of value to customers, with time this technique has been forgotten and is now replaced by methods such as points.
Customers in today’s world enjoy being valued and in some cases they are even ready to pay a certain amount for it.
This includes a system where customers pay a certain amount to become a premium member and then get benefits in return. Benefits may include discounted prices, vouchers, early access to upcoming products and so on.
It is one of the fastest growing forms of rewarding as it creates value for both business and customers. Customers enjoy benefits and value and businesses enjoy more customers and their loyalty along with the fee charged.
It is one of the most interesting reward systems, in which customers get rewards or points and can redeem these points with the business itself or its coalition partners. This way customers get a margin of using rewards at more than one place and businesses enjoy traffic and reach of its own as well as partner’s business and customers.
In this system all the coalition partners use the same and common thing as reward and this thing can be used for shopping and rewarding across all these partners.
It refers to a system when any of the two forms of rewarding are used together, for example- using points instead of direct bill amount to unlock milestones in tiered rewarding. Or combining cashback with premium rewards i.e. providing cashbacks to premium members of premium loyalty programs.
This reward system has three fold benefits, as along with the benefit of customer and business, this system provides value to society and community. This reward system is made on the basis of the values of the business. Example- When a customer makes a purchase of Rs.500/- , the business donates Rs.5/- for girl child education.
This system fulfils societal responsibility of business and helps businesses to earn customers and their loyalty leveraging on social values.
Gamification creates motivation and zeal in customers to win, and for winning they end up getting into the business funnel. The basic idea is to turn rewards and loyalty programs into games and encourage customers to purchase repeatedly. This not only does value creation but also keeps customers entertained and engaged with the business. It is more effective in businesses whose target audience is between the ages of 13-40 as these age group people are more into gaming and enjoy the same.
The newest innovation in the rewarding industry is crypto rewarding, in this the customers get cryptocurrency instead of hypothetical points and this currency can be used to redeem discounts or earn more rewards.
Being new it is yet to make its place in the Indian market but interest of customers in cryptocurrency makes it an appealing and the best reward system for future. As it provides value of rewards more than its actual value and also provides real value to the customers.
One time rewarding and discounting is good to acquire customers but to retain them for long term and generate business out of these loyal customers need a proper rewarding and loyalty program.
Once the customers get into the business funnel and start returning to business, the value of business grows along with customer satisfaction.
When customers feel valued and enjoy the experience with the business repetitively they start trusting that business. Once the business earns the trust of people and keeps up their promise, they are more likely to earn success and become a brand.
Rewarding creates the value of being valued and appreciated in the customers and this feeling can be monetised if the business successfully builds the relation and connection with its customers.
According to research, Loyal customers are the most profitable as they may bring more business, more customers and help in exponential growth of the business. Loyal customers bring a larger customer base, through referrals and they themselves purchase frequently which results in higher revenue and profits for the business.
Rewarding and valuing customers gives business a competitive advantage over others as who doesn't like getting more in the same money. And rewards not only help to get customers more than competition but also help to use loyal customers for long term growth and sustainability of the business.
Rewarding creates understanding and trust between the business and customer and hence, it is easier to communicate and provide messages to these customers.
In B2C business, rewarding is the easiest way to start a conversation with the target and prospects as people are more likely to listen to you if it's about their benefit.
As rewards are more likely to grab the attention of customers and maintain loyal customers, customer acquisition and maintenance costs keep dropping down with the time, making it economically better for the business.
Fayda Shop is providing a custom made loyalty program to local and small business, providing them with an application for creation of loyalty program as per business’ capacity to incur cost, using Fayda Coin.
Fayda coin is an in house cryptocurrency by Fayda Shop, which creates 10 times the value of what a business offers to its customer as a reward. As crypto rewards are the future of rewarding industry, Fayda Shop is making businesses future ready using Fayda Coins.