In the 21st century, businesses drive and sustain on their values and long term goals. It's a customer centric world and today the only way you can derive this intrinsic value is by bringing a smile on the Customer's face.
So what does a genuine customer need?
Let's take an extract from our daily lives
Today almost everyone goes to a shopping mall and buys stuff, which they would have bought in a mom and pop store a couple of decades ago at much bigger discounts. People are ready to shell out more than their ancestors. What has brought about this change? It's really the change in the basic lifestyle of the majority population. The concept of a shopping mall where you get a variety of options to choose from attracts the customer towards it.
What more do these stores offer him? They offer him membership reward programs to provide him an added incentive to shop at their stores. User can use it the way he wants: Get added discounts on products, redeem them to buy other products of his choice, get discounted offers on Flights, Restaurants and so many amazing deals to choose from.
Reward Programs in businesses are essentially a means to develop business by enticing the customer and create a long term association with him.
For some people like me, I will buy the same brand of Shirts, Jeans, perfumes, glares whether I buy it from a normal store or a store that offers me a rewards program. So what difference does it make?
It does make a difference. I am perfectly okay shelling out an additional dollar or 2 as a premium on any product if I know that I am getting a rewards program which is giving me an added luxury or a discounted luxury to choose from. It's like an investment, which I can redeem whenever I want to.
Incentive Program offers an end user a clear cut incentive and value for money, which he can spend towards his likings. Gone are the days of Customer satisfaction. In the current times, businesses need to strive for Customer delight and the more you achieve that the more are your chances to succeed in any business.
Market is driven by values. Values are driven by quality and fair price. In today's world, that's not the only thing. Values also need to be attached with a fair share of incentive. In Software industry, employers provide a number of reward programs to their employees and the primary objective is employee retention. These programs help the employer to reward the employees for their contribution in a specific domain and technology. The Employers spread the rewards benefit over a period of time in order maximize the chances of retention.
Historically, reward programs to customers worked as saviours during recession times. The whole objective behind this initiative is to provide benefit to the customer based on the period of association and loyalty. The more you spend the more margins the businesses can derive and they can in turn return a favour to the customer by providing him some reason to smile.
An Incentive Program brings in a well-knitted association of organizations. Businesses need to tie up with several other businesses to make this possible. This brings about a sound amount of profit sharing between organizations and helps to grow the business.
One of my friend's owns a books store in a relatively sparsely populated town. Due to continuous low turnovers every quarter, he was on the verge of shutting his shop. As a last resort, he introduced a membership Incentive program to all his customers. The highlights of this program included rewarding points to members on enrolment. Every purchase of $5 fetched the customer 10 membership reward points. Once the customer earned 100 membership points, he could redeem them either in the form of money or for buying other books. The idea hit the nail spot on. In a few days, the volume of sales in his store grew by over 40% and he started deriving a handsome profit on his investments.
In a nutshell, an incentive program is a highly effective means of improving business opportunities and profit margins if it is strategized and modelled as per the needs of the target customer.
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