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Are Your Rewards Programs Punishing Your Customers?

By: capturecode | Jul 3, 2014

The incentives offered through rewards programs are a token of the gratitude that the companies show to their customers, for doing business with them. These programs are also meant to encourage favorable customer behavior, which is loyalty, increase in spending towards the products or services offered by the business and promoting their brand voluntarily. But the irony is that most businesses end up punishing the customers instead of rewarding them for the right behavior. Is your company doing the same too? Read on to find out.


Expecting customers to repeat behavior solely for rewards

Many marketers try to condition their customers to repeat an action by offering them a reward, just like psychologist Pavlov conditioned his dogs to repeat a behavior by offering food. What marketers fail to understand here is that offering what they think as reward is not enough to encourage behavior that is favorable to the business or to increase the product’s lifetime value. Marketers need to understand that loyalties are declining constantly, which is why they need to offer more than just a tangible reward to make the customer come back for more business.


Offering punishment as reward

Most often, the rewards that a customer gets from a brand is in the form of discount coupons, gift vouchers etc. On the other hand, the business may be punishing the customers with unfriendly return policies, high fees and increasing prices. For instance, an existing customer of a bank does not feel rewarded when he is being charged a high rate of interest, and has to pay hefty transaction fee, while receiving a coupon or voucher as reward.


The existing customers feel punished whereas the new customers are rewarded with lower fees and rates of interests. Marketing professionals fail to understand that their strategies may work only to attract new customers for the business, but not to increase loyalties of existing ones.


Focus on experience

The best way to reward your customers is to make their experience with you a pleasant one. Let’s take an example of a customer who purchase a product in haste or by mistake and changes his mind about it immediately. If you don’t allow your customers to return or exchange what they buy, then you are only punishing them for shopping at your store.


Reachable tiers in the program

Every rewards program has levels or tiers that the customer has to achieve to get rewarded. But most of the programs are designed such that it takes a long time for a customer to move from one level to another. Asking the customers to achieve unreachable goals for meager rewards isn’t as attractive as marketers think. If you want your customers to feel rewarded, make their goals reachable; don’t punish them with unreachable tiers.

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