Buy ten sandwiches, get the eleventh free. Earn one point for every mile. Spend $100 and get a $5 rewards certificate. Ten percent off the first Tuesday of every month. Three percent cash back.
Loyalty programs have a variety of structures. When they work, they work great. When they don’t, they can damage your affinity for a brand. In certain highly-competitive markets business and brands are going above and beyond to forge a loyal relationship with their customers.
According to Consumer Reports “about 85 percent of of U.S. households participate in at least one rewards program.” My wife and I have participated in several over the years with varying results. Here’s a look at a few of them — the good and the bad.
Gap
Between myself, my wife and my son we do plenty of shopping with Gap Brands (Gap, Old Navy, Banana Republic). With our Gap card we get a $10 rewards certificate after we’ve accumulated $200 in purchases. We can accumulate points at any of the Gap Brands stores and redeem our rewards there as well. The first Tuesday of every month we get 10% off. With the frequency of which we shop there, and the fact that we don’t carry a balance, this has worked out pretty good for us.
Bed Bath & Beyond
We don’t own a Bed Bath & Beyond MasterCard, so technically this example is an outlier, but we do get a 20% off coupon from them in the mail every month. Needless to say, they are top of mind whenever we’re looking to purchase things for the home. All of our purchases there also go towards our Upromise account where we’re accumulating money for our son’s college education. We also just found out that their coupons can be used at Buy Buy Baby. Good deal.
Chase Rewards
Like most credit cards we get points for dollars spent. The points are easily redeemed online. Ordering Amazon rewards certificates were a snap. We primarily use our points for travel. For a few extra points they’ll book the travel for you, with no restrictions — much much easier than exchanging for airline rewards. We can carry our points over year-to-year for an annual fee that they always waive for us. And we never carry a balance on the card, so this is like free cash. Very nice.
Chase does miss the mark however with a Rewards site that feels like an generic off-the-shelf eCommerce package from 1998. There’s clearly an opportunity for them to create a Rewards experience that’s as fun an immersive as shopping.
Airline Rewards
Airline loyalty programs for me have been a bit of an oxymoron. I’ve accumulated a lot of points with several, but unless you have the foresight to book your travel six months in advance, you’re out of luck. Airlines reserve only a certain number of seats per flight that can redeemed for reward points. Once they are booked up, that’s it.
All the restrictions and blackout dates have gotten so laughable that Capital One based a whole ad campaign around them.
The few times I tried to redeem my points with Continental there were no reasonable openings for months. Why airlines seem to think that rewards programs that are near impossible to use will spark customer loyalty is beyond me. Why not make it harder to earn miles and easier to book flights?
The Consumerist covered this topic a few years ago and supposedly Continental was one of the better programs. That’s scary.
Duane Reade
Duane Reade is a pharmacy chain in the New York metro area. With your free Duane Reade card you get discounts on select items and an automatic $5 “coupon” for every cumulative $100 you spend. The problem here is that the automatic coupon is attached to your receipt and unless you’re paying attention you’ll miss it. Also, you only have two weeks to redeem the coupon.
Since joining we’ve accidentally tossed one out with the receipt and didn’t use the other two before they expired. Our strategy moving forward is to pick something else up immediately after receiving the coupon and get right back in line.
One excellent perk that they don’t do a good job publicizing is that you also get great deals (I mean really great deals) on Broadway and Off Broadway shows.
These guys have some good pieces in place. They just need some more work on the delivery.
Best Buy
A ways back when I was buying a lot of DVD’s I used to shop at the Virgin Mega Store at Union Square. For all new releases I would go next door to Circuit City as they were cheaper. After a while I started to get upset that neither store offered any kind of loyalty program. Did I mention I used to buy a lot of DVD’s?
Shortly thereafter a Best Buy opened up near my office. I joined their Reward Zone program and did all my DVD shopping there ever since. The program automatically mails you rewards certificates after you’ve attained your points. You can choose what denominations you’d like to receive them in from their website. You also get various other special offers, such as an extra 5% off during special sales events.
When we purchased a plasma TV from them a few years ago, we received enough rewards to get a new DVD player for free. I think they’ve made it a bit harder to earn the rewards recently. But overall these guys really get it. The program is incredibly customer friendly, has lots of perks, integrates well with their online store, and a great website for managing and tracking points.
When done right, rewards programs can go a long way toward creating consumer loyalty. The trick is to make them easy to understand, easy to track, and easy to use. Better still, deliver your program through a unique brand experience and you’re in the position to own the rewards experience for your category.