Will the majority of your customers use your rewards technology?

With so many new technologies emerging, it’s tough to find the right one that suits your business.  As a restaurant or cafe, one of your primary objectives is to turn a new customer into a loyal customer.  Though great food and great service play a key role, a new generation of customers are asking for much more from a business: they want recognition, they want rewards, and they want special treatment.

To facilitate this relationship with a loyal customer, many businesses are turning to rewards programs.  You have four options to choose from for your rewards program:

1. Punch card
2. Magnetic rewards card
3. Gaming apps such as Foursquare or SCVNGR
4. Loyalty Management Apps such as RewardMe

Lets dissect each solution and how it applies to your mainstream customer – the majority of your clientele.

1. Punch Cards

% of customers that CAN use a punch card: 100%

Pros:

1. Low cost
2. Simple for the cashier
3. Can be used by all customers

Cons:

1. Easy to cheat
2. Customers often lose their punch card
3. No deep relationship built with the customer

Mainstream use: Yes, mainstream customers use punch cards everyday at cafes or yogurt shops.  The problem is that customers often lose the punch card, throw it away, or forget to use it.

Furthermore, the relationship between the business and the customer stops at the “punch.”  Do you know the customer’s preferences?  Can you contact this loyal customer through email or on his phone?  Do you recognize this customer in any way so that it makes him feel special?

A punch card is an old form of marketing that is no longer capable of satisfying the needs of a business.

2. Magnetic Cards

% of customers that CAN use a use a magnetic rewards card: 95%

Pros:

1. Able to track price and items purchased
2. Simple for the server
3. Can be used by the majority of customers

Cons:

1. Expensive
2. Lengthy sign up process
3. Another card to carry in the wallet

Mainstream use: Like punch cards, magnetic rewards cards are commonly used by the mainstream customer.  They use supermarket and retail rewards card all the time; but there in lies the problem – how much room do they have in their wallet for another rewards card?

Furthermore, how much do you have in your budget for an expensive solution?  Though magnetic rewards cards give you a lot of information about the customer, it can be overwhelming – 4/5 of companies that use magnetic rewards cards use only 10% of the features.

Customers want something quick and easy.  Magnetic rewards cards require customers to fill out a form and give out their email or phone number to join your program.  It’s this tedious process that is avoided by the new generation of tech-savvy customers – they’re impatient, want their reward now, and hate to carry around something physical in their wallet when they don’t have to.

3. Location-based Gaming Apps

% of customers that use a gaming app: 1.6%

Pros:

1. Targets a group of customers that use Facebook, Twitter, and Yelp

Cons:

1. Only 1 out of 100 of your customers uses a gaming app
2. Does not verify a purchase
3. Distracts the customer from the dining experience

Mainstream use: If only 1 out of 100 of your customers uses a gaming app, then it is clearly not used by the mainstream customer.

If you use a gaming app such as Foursquare as your main rewards program, then you’re excluding the vast majority of your customers from earning rewards at your business.  More importantly, it’s NOT your rewards program – it’s Foursquare’s rewards program.

In essence, it’s Foursquare’s job to get you customers, but you would never ask your customer to download Foursquare in order to join your rewards program; it just doesn’t make sense.

You need your very own rewards program.  You need your cashier or your server to be able to tell you best customers to “join OUR rewards program.”

4. Loyalty Management Apps

% of customers that can use a loyalty app: 30%

Pros:

1. Verified purchase
2. Quick and easy to join
3. Low cost
4. Builds a relationship between the customer and the business

Cons:

1. Does not track purchase amount

Mainstream use: Will the majority of your customers use your rewards program if it was on a mobile application?  30% of your customers have a smart phone and 95% of iPhone and Android users have downloaded at least 1 application.  Given the right incentive, smart-phone customers will download your rewards program.

With a loyalty management app, your server or cashier can tell the customer to “join OUR rewards program.”  It’s the digital form of the punch card and magnetic card that mainstream customers used to love so much.

In the beginning of 2011, 30% of your customers can use an app such as RewardMe; by the end of 2011, 40% of your customers will be able to use RewardMe.  The number of smart phones users is growing rapidly.

How will you provide rewards to your best customers?