What's the difference between a deal and a reward?
No matter how good a product or service might be, consumers are increasingly smart, savvy, and eager to find a bargain – so brands really do have to do more in order to attract people to them. Fortunately, of course, there are loads of different tactics that brands and marketers can use to stand out and engage customers, namely deals and rewards.
But in order to make the most of these promotional mechanics, it’s important to fully understand the difference between the two, when it’s best to use each kind of engagement tactic, and what they mean for customer loyalty.
Let’s talk deals
What do we mean when we say a deal? It’s a fairly vague term that covers a wide range of promotional options, but it could mean a simple buy-one-get-one-free deal, money off offers, or a try-before-you-buy, satisfaction guaranteed arrangement.
These deals attempt to persuade someone to buy something they might not otherwise have bought by making the product or service more attractive.
And we all know that deals work a treat – you don’t have to look much further than Black Friday to see the lengths people will go to in order to avoid missing out!
Deals are a fantastic way to attract new customers and encourage a one-off purchase. But what if your aim is to inspire customer loyalty? To keep people coming back for more, you’ll have to keep the deal going – which can have a huge impact on profit margins. And if the deal disappears, why would people carry on purchasing?
If loyalty is your aim, you need to offer people more than an occasional deal. Sustained engagement requires a little bit more input – it needs rewards.
What makes a reward?
While a deal attempts to persuade someone to buy something they might not otherwise have bought by making the product or service itself more attractive, a reward is something that focuses on making the transaction of the purchase – the act of giving money to you, the retailer or service provider – more attractive.
There are loads of great ways to reward customers. Let’s take a look at some of the most effective ones.
The average consumer has a lot of power – they can decide where they’re going to spend their money! But that’s also pretty much the extent of what they can do. They’re not usually in a position to negotiate a better deal with the companies they want to buy from, and they’re shut off from insider industry info.
But you’re not – and giving your loyal customers access to better prices, exclusive services, and things they won’t be able to get on their own, are an essential way of keeping them coming back to you. We don’t just mean better prices with you, either – an effective loyalty programme can include offers and discounts with partners such as supermarkets, leisure activities, and more.
An absolutely classic tactic for inspiring customer retention – it’s the principle behind every single loyalty card accumulating stamps in your wallet. Reward points don’t give money off up-front – instead, they require consumers to continue spending with you as normal, storing up contributions towards a better deal next time.
Loyalty points really do work, but only if they’re convenient. It needs to be as simple as possible for people to build them up and then spend them. For example, Starbucks updated the card-and-stamp model with an app that increased return visits by 50% – a big part of why it was so successful was that people didn’t need to carry anything extra other than their phone, and points could be redeemed in the app. Nice and simple.
Something for nothing
A lot of the purchases we make throughout our lives are things we have to buy, not things that we want to buy.
Insurance is a perfect example of this – you buy it hoping that you’ll never have to use it. For most of us, this annual purchase is undertaken completely begrudgingly, and we may even come to resent to company we’re giving money to in exchange for what feels like nothing.
This is where a reward can be incredibly effective. It’s different to a deal, because you’re not cutting the price of the purchase. Instead, you’re giving someone something in return for choosing you as the supplier of their unpopular purchase.
A good enough reward can keep people coming back time and time again – they feel like they’re getting something great for their money, after all – and could well trump a cheaper deal from a competitor.
Higher investment means higher reward
A reward programme does ask a lot more from your buyer than a great deal does. This means that the reward has to be worth their while – that bigger investment needs to pay off in the form of a bigger reward.
Great rewards can ultimately go a long way to saving people money, while giving them access to things they won’t find anywhere else. Over time, these are things that people come to rely on – and they’ll stick with you over better deals to avoid losing out on their rewards. Now that’s what we call loyalty!
Of course, it doesn’t have to be an either/or scenario. Deals are a fantastic tool for attracting customers, while rewards are an essential method for keeping them coming back for more. If you have any questions about finding the right balance, please don’t hesitate to get in touch with us.