Don't Make These Mistakes: the Biggest Retail Rewards Program Fails in History

Feb 5

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2/5/2014  RssIcon

Developing customer loyalty through a rewards program is a great way to trigger increased consumer spending. These loyalty programs also provide a way to remain in constant communication with customers. Learning from the following loyalty program disasters will ensure that your business reaps the benefits without losing money and respect.

Avoid Rewarding Loyal Customers with Dirt

There are a variety of rewards that motivate customers to spend their money in a loyal manner. Some people enjoy perks such as free merchandise or services while others prefer earning steep discounts on what they normally purchase. The least inspiring way to run a rewards program, on the other hand, is to dangle an unappetizing carrot for the customer to chase. One of the best examples of a terrible customer reward is courtesy of Wells Fargo. This banking giant offers their customers dirt from fourteen different ballparks as a reward for redeeming over 24,000 points, which requires over $20,000 of spending on a Wells Fargo credit card. Citibank is also guilty of offering useless rewards, allowing their customers to trade 1,100 points for a FarmVille Clydesdale horse, which manages to provide no value in both real and virtual realms.

Zealous Value Hunters Will Find and Flaunt Loopholes

Rewards programs are meant to attract customers and influence them to spend more money with your company. However, if you don't carefully consider how your rewards program works before you implement it, hardcore bargain hunters will find a way to abuse the program as much as possible. One consumer earned four million air miles by moving money in a circle, purchasing thousands of dollar coins from the American mint through his credit card and using the shipment of money to pay the balance, thus earning points that were exchanged into air miles. When the United States Treasury stopped selling dollar coins, he performed the same routine with Amazon Payments, an online payment system that rewards people for loading money into Amazon accounts. With Amazon, he simply transferred money to and from family members, circumventing rules that prevent people from moving money to themselves for the sole purpose of gathering rewards.

Promising the Sky? People Will Expect Overnight Delivery

One of the most famous consumer reward program fiascos featured a commercial from 1996 that promised Pepsi swag such as sunglasses, a jacket or a t-shirt to people who collect enough points. The end of the commercial displayed a fighter jet with the words, "Harrier Fighter: 7,000,000 Pepsi Points." Despite the fact that most people understood the commercial to be a humorous way of grabbing attention, one business student took it literally, gathering an investment group who put together enough points to acquire the jet for just over $700,000 worth of points - a great deal considering a Harrier jet cost over $33 million at the time. Eventually, litigious sentiments prevailed, with a judge agreeing that no reasonable person would expect a military jet from Pepsi, but not before three years of legal proceedings and some negative publicity.

There are many different ways a retailer can implement customer loyalty programs. Employing Dynamic RMS Points of Sale with a loyalty program like Hero Points increases communication with customers while reducing the overall cost of offering rewards. Ultimately, careful consideration of how a program works is vital if you want to derive the most benefit possible for your business.

Copyright Retail Hero ©2014

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