Last week, Ad Age published a great article, Ad Age Best Practices: How to Create a Rewards Program That Really Works. I highly recommend reading it. The one thing the article didn’t cover is common rewards program errors and how to avoid them.
Common error: Offer only BOGO discounts when your target market is mostly single
I jokingly nickname these rewards programs “Non-lonely people discounts.” There’s nothing wrong with Buy One, Get One Free (BOGO) if your main target market is married, but with the the majority of US adults being single, I don’t recommend rewards programs based on BOGO discounts. It’s not that single people can’t grab a friend and take advantage of it, but this creates another step for them to do, which definitely lessens the reward. You can have some of these as part of your rewards programs, but you should also include other non-BOGO rewards as the majority.
Common error: Give rewards that consumers can get other ways without having to do anything
When Verizon Wireless announced that they were going to be providing a rewards program, Verizon My Rewards+, I was excited; I’ve been a loyal Verizon customer for years. The problem was, when I went to see what I could get with my rewards points, it was basically discounts I could already find somewhere else.
For example, it’s not hard to find 10% off discounts on gift cards to dining and shopping category stores through coupons, special promotions, etc. But Verizon’s “reward” program is:
$100 gift card for dining or shopping chain (such as Texas Road House) – 1,000 rewards points = $90 (10% off)
Groupon and LivingSocial have better deals than that!
In comparison, my credit union offers full gift cards (not discounts) for using their debit card. In one year, I accumulated enough points to get a $50 Amazon gift card and a $25 Starbucks gift card completely free.
What makes this example even worse is, when I sent feedback on the program to Verizon, (at their prompting) all I got back was a form letter/macro about how amazing their rewards program was. Whoops.
Common error: Get creepy with data collection
I think most people understand that companies use rewards programs to collect consumer data (at least, I hope they do). But one thing is for certain, people don’t like to be reminded that a company is using the data to drive more sales.
For example, it’s ok for Walgreens to remind you that you need to refill your prescription or Amazon to suggest other movies/music you may like, but it’s not ok for Target to predict the pregnancy of a teenage girl. If you are going to use the data to promote items to your consumer base, be careful, make sure that the use of the data has some direct benefit to them.
What rewards fails have you seen? What rewards programs are your favorite?