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| Marketing |
| Retail Success - Customer Incentive Programs By Rising Women Magazine Whether you are focussing on increasing your outside referrals or building customer loyalty, offering incentives is a proven method for creating an end result where both your business and your customers win! • Work Through the Details - The first step to developing an effective incentive program is to have a clear idea of what you want to achieve, and if it is achievable. Simply stating that you want to increase your revenue is not enough, you need to work out the details. Increasing your revenue may be the desired end result, but consider the hidden costs and how feasible implementing the program is. Consider your staff capabilities, your internal facilities (accounting, data entry), your budget, even the process of how the incentives will be documented and distributed. •Appeal to Your Audience - You can get a clear idea of the type of customers you attract and what motivates them by looking at prior marketing efforts and in-store sales statistics. If your prior marketing reveals that ‘sales’ are not meaningful to existing customers and do not draw in new ones, then your incentive program should not be based around discounts. Perhaps awarding purchases of over a certain amount with a ‘free gift’ will prove to be more significant to both the customer and your sales totals. An in-store customer survey is a great way to gather the information you need to design your incentive program, not to mention setting up your database for direct mail announcements. On your survey ask your customers what appeals to them as an incentive - do they prefer ‘points’ toward future purchases, immediate discounts, free gifts, etc. Let your customer be your guide. •Evaluate Your Budget - Incentive programs cost money, whether you are offering a percentage off or providing ‘free gifts.’ It is important that you can justify the costs with every purchase on both a short and long-term scale. These costs do not only include price reductions or wholesale on small tangible gifts; consider the costs of outside and in-store marketing, promotion material, signage, software for data entry and manpower. For every dollar you invest, you should foresee at least ten dollars in increased revenue. •Select the Right Incentive - Once you have a clear idea of what motivates your customers and what you can invest, you are ready to make the decision as to what incentive program will create a win-win customer/business relationship. First, your incentives must be realistically achievable by your customers. For instance, if the average purchase in your store is $25, you cannot successfully motivate your customers to buy $300 just to receive 50% off their next purchase! Secondly, it is vital that you know how long you can sustain the program. Consider the impact on your business if you cannot continue a program due to poor budgeting or lack of supply of the free gifts. Ideally, you will want to implement a program that lasts forever, however, be realistic - put an expiry date for redemption of rewards - this keeps you from over promising and keeps your customers accountable. Following are a few popular incentive programs: 1) Points Program - A points program can be created using a database or simply punching a card that is kept on file by your till. Many coffee houses use this method. You have to determine what each ‘point’ is worth - perhaps every purchase over $30 receives one ‘point.’ 2) Value Bucks - Similar to the ‘Canadian Tire’ concept, offering ‘play money’ in a percentage amount of the purchase is a great tangible reward. This system requires a little more math than the points program, but is well received and can be worth your while if you run a business that does not cater to immediate repeat business, such as a gift shop. This is a long-term program but still should have a set redeeming period. 3) Free Gifts - This program is ideal for bigger ticket items or larger sales, where you can justify the wholesale cost of a special gift with each purchase. A great way to keep your customers coming back to your store is to have feature gifts every week or every month. Be creative. 4) Referral Program - Incentive programs do not always have to be created around immediate purchases. Referral programs get your satisfied customers promoting your business for you. Referral incentives can be created using a points program system, however it is important that each new customer is asked who had referred them, if any. With a points program, ‘value bucks,’ or referral incentives, the ‘rewards’ should be redeemed within a set time period. A great way to incorporate this into your program is by having a VIP shopping event on one of the last days of the month. •Promoting Your Program - Now that you have an excellent system in place that honours your customers, get the word out. The first place to begin is by contacting all your existing customers (let’s hope you have already incorporated the creation of a customer database into your daily business dealings). Direct mail or e-mail is a great way to let your customers know of your new program. Outside advertising is also required to draw awareness to the public. Another great approach is to have a huge in-store event as a launch of the program. All who attend receive so many points, value bucks or a small token gift just for attending! •The Finishing Touches - Incentive programs require the full participation of all who are involved. Make sure your staff understand the policies and the importance of tracking the incentives. It is a good idea to create an ‘Incentive Program Operations Manual’ that details all the procedures. Update this manual weekly, including customer comments, conflicts in the system, etc. Keep in mind, the program has to be developed to meet the needs of your customers. Consistent evaluation is important in creating an incentive program that is a winner! Written by Rising Women Magazine FYI Team - publisher@risingwomen.com |