Reward schemes can encourage customers to spend

In a competitive market your company needs to take steps to make it stand out from its rivals in the eyes of clients. One good way to do this is to implement a customer reward scheme that will incentivise people to buy your goods and services.

The concept is simple – offer clients something extra or the promise of a discount and they will give you repeat business. It is used effectively by a number of high street chains, but can also work for smaller retailers and other types of firm.

You probably do not have the kind of budget available Tesco has to run its Clubcard programme, but there are good alternatives available. Approaches as simple as gift or travel vouchers for regular customers or discounts for bulk purchases can work well.

There is, of course, a little more to it than dreaming up an offer you think will be enticing to your target market and watching clients come flocking through the door. Such schemes require careful planning and must be implemented in a straightforward way that everyone can understand.

Your starting point should be to work out what you wish to achieve from the programme. If you have an established customer base but are worried about losing them in an environment of increased competition, you need to focus on loyalty and retention – points schemes based on volume of purchases can be particularly effective.

Should your aim be to attract new clients, there are a host of incentives you could use, but you need to think about how you convert them into regular customers. Discounts are a tried and tested method of increasing sales in the short term, but unless the offers require people to return, you are unlikely to get much long-term benefit.

Once you have worked out what you wish to achieve, you can think about what sort of incentives are attractive to your target market. Free or reduced-price items are always popular, but points-based loyalty schemes that offer the chance to save for holiday vouchers or big-ticket purchases can also be effective.

It is crucial that you properly cost your rewards programme, or you could end up losing money on any new business you attract. While loss leaders are not unusual in customer acquisition programmes, it is important you know how to make money from new clients going forward.

Finally, make sure the terms of the scheme are perfectly clear. A lack of clarity about how to secure the rewards is likely to alienate customers rather than make them more loyal to your business.