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20% back to customers reward program

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pizzapie

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I’ve been tossing this idea around. I want to implement a rewards program that is very aggressive without giving away the farm. Most reward programs that give company cash back are around 5%. Does this make customers run to your place? How about offering 20% back in store cash?

How it will work:
Monthly program
20% certificate sent out after the 15th of the following month via email only and expire in 10 days.

Pros and cons ???

Pro
Create a customer base that is loyal to your shop only
Gather emails of customers to market your business
Being so aggressive at 20%, customers will spread the word about your shop like a wild fire
Have customers constantly ordering just from you establishing a habit for them
By sending out rewards on the 15th and expire within 10 days, you get that customer to order when it is typically slower(3rd week) and establishing even a more habit from your customer bas
more…???

Cons
If it doesn’t work, you could owe a lot of food
more…???

What’s your thoughts?
 
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For frame of reference:
We use the Grande Cheese stamp card. The customer receives a free large 1 top ($13 value) when they purchase 12 medium ($10.50 1 topping) or large ($13 1 topping). Plus Monday is double stamp day. So we could return as high as 13%.

On our $6500 a week in sales, we have hundreds of people with stamp cards, and give away about 10 pizzas a week.

I would also say about 75% of the eligible customers are pretty religious about getting their card stamped.

Personally, I think your program is too aggressive, and implies to the customer your prices are artificially high to absorb the 20% cash back.

I also have never been successful at convincing customers to order when I want them to.

If you try the program, I’ll be very interested to hear how it goes.
 
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I have been kicking around the same idea but at 5% with a $10 rewards given out when they get to $200 in purchases. I know u want to be agressive but in my opinion 20% is way to high. Also, with that ten day expiration I think you could get killed with those things and not be bringing any money in. You don’t want to be too busy with free food to not service the regular customers correctly. When you say that you plan on doing it thru email, how exactly do you mean? Would they just have a piece of paper saying how much the reward is. I was thinking about notifying them thru email but keeping the credit in the pos system. Is anybody by you doing anything like this. As far as I know I would be the first in my area. First is always the best. If you don’t mind me asking what kind of sales do you do and where would you like to be. I am at around 26-27 a week and would like to get to consistently 30-31. That is about 50 more orders a day. I think offering people something should give me some buzz and get me closer to where I want to be. They may not order from me everytime but we will notify them when they are close and getting to use the reward should keep us in their head. 20% is a big number to overcome.

Jim
 
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I would agree that 20% is too high. As a customer, I would just prefer you lower your prices than keep them artificially high in order to give me a rebate.
 
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i personally wouldnt want a change of $4.87 to be given back to me, i rather have the 20% go towards my purchase. Do the 20% thing on 10 days of your slowest month. Maybe you want to do it for lunch if you are not busy, that way you balance your work load between lunch and dinner times. 5-10% is way too low for me to care, though some people do.
 
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Run a customer business report on your POS and identify every customer that has ordered more than 5 times in the last six months. Cut out a couple of hours a week for the next 2-3 weeks and call them ALL on the phone and thank them personally for the business. (If you get an answering machine leave the thanks on a message). Do this every 3-4 months for customers that have ordered 3+ times. Costs you nothing and works better than anything else I have ever done.

The personal thanks are more highly valued than any discount and every once in while you hear something that you really need to hear.
 
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Bodegahwy - that’s a great idea.

We have a rewards club. We send out a $5 gift certificate for every $100 in orders. That just changed from $10 to $5 and nobody cared, same amount redeemed. We have about 50-60% redeemed each month. In about 6 months, I’m going to change it to $5 every $200 in orders.

You don’t want to give back 20%. You’re operating on a 35% profit margin if you’re good, why would you want to cut that in half. Most rewards programs from credit cards and stuff is like 1% or less.
 
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mandino:
Bodegahwy - that’s a great idea.

We have a rewards club. We send out a $5 gift certificate for every $100 in orders. That just changed from $10 to $5 and nobody cared, same amount redeemed. We have about 50-60% redeemed each month. In about 6 months, I’m going to change it to $5 every $200 in orders.

You don’t want to give back 20%. You’re operating on a 35% profit margin if you’re good, why would you want to cut that in half. Most rewards programs from credit cards and stuff is like 1% or less.
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We will be changing up the frequency and amount of rewards to mimic the reinforcement effect so successful in the gambling industry. It will still average out the same and be proportional to what the family spends.

Then for our most loyal customers, we will surprise them in December by comping their meal. We will flag those accounts ahead of time so that the manager is alerted after the order is placed. He will then contact the customer either in person or on the phone to let them know it is “no charge” as a way of thanking them for supporting our business.

I also like the idea of handing out red envelopes with one of several prizes inside. It requires that they hold on to the unopened envelope until they order in January (slow month). At the register, they can open the envelope to see what they have won… from something really cheap to a grand prize. The key is no one actually wins the lowest prize (which is perceived as “losing”). Everyone wins at least the prize above that – like breadsticks or free drinks. The grand prize can be something like free food for a year (once a week, $20 value). Even that is only a marginal cost of about $300.

Also, we want to smooth out the demand cycle, so will have a standing deal on Mon, Tue, and Wed. At the store I managed years ago, we had pepperoni Monday which was a big Pepperoni pizza for $5 or something. We sold tons of them… usually with high profit drinks or sides. It allowed us to get in customers of a lower price segment of the market without compromising our pricing structure and made those days profitable with the lower labor costs (lots of the same type of pizza means smoothing out the production cost).

Lots of neat ideas out there. I don’t like to discount without reason or have any program that becomes an expected entitlement. If you always do coupons, no one will order without them. If you always give back 20%, they will question your pricing.
 
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I like the idea of running a POS report for high volume customers, but this twist might add more value.

Instead of only calling or sending a card, send them a special offer for slower nights in the week, that only THEY get, and promote it as such. You could include those high volume customers in a “Ring of Honor” club or whatever you want to call it, complete with a cool card that if other customers see it would be a way to promote it.

It might be a BOGO or a 7 buck large etc, something that is a jaw dropper but not giving product away, on a low sales night, carry out only etc.

Or you could even cross market with another business like a movie theater or car wash, get some freebies that are pretty cool and those “Ring of Honor” club members get some great deals and promotions.

All sorts of ways to approach it, I would try to create an aura around whatever it is and make the general customer aware with some promo props, train cashiers to say it is for higher volume, frequency members and a certain level has to be met etc etc.
 
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I have just started a “Cyber Discount Program” in which the customers contact me via email to sign up. I started knowing I was having appr. 20 hits on my website/day, by making it the very first thing you see. You guys can check it out at dariospizza.net.

its been about 5 weeks, and I now have over 50 who have signed up. This is going to be a very powerful source of advertising for me, as I firmly believe its all about reminding your customers! And emailing costs nothing.

Pete
Darios Pizza
 
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Does any one sell a “loyalty card” that works backwards?..What I mean is the the card is used up rather than filled…So say a local team or school sells cards on your behalf…The spaces on the card are redeemed for items…So you could include a free pizza and a few add-ons that are free with subsequent purchases or some other deals…That way extra punches will not happen because they are in your favour versus the customers favour…Somewhat similar to the peel off coupon cards but I think at a much lower cost and perhaps quantity…Thanks for your comments…
 
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A lot of interesting spins/views/experiences here. 20% may be a little high but if that’s your only marketing, it might pan out. Some give away a pizza which is around 13% of gross order- they(the customer) decides when they order. If you can control the eating habits of your customer base along with owning your customers(they only shop at your place) would you go for it?

I know this is way outside the box(might be to far) but 2 fast nickles are better than one slow dime. We have stores that give away gas credits and they own the market. In these changing consumer buying habits days, customers are looking for what’s in it for them. If you have a great product along with a highly agressive pay back, do you think you can destroy the competition?
 
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It all depends on whether my volume can increase and sustain the loss in cost of the 20% pay-back plan. Volume, volume, volume.

In my situation, no; it would not make sense at this time for me to give 20% incentive program.
 
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I don’t know. I would suggest that you spend that money on advertising. Nothing beats more than good advertising.
 
honestly, i did some asking and it seems no really cares even if it’s 20%. if you use percentages it will only work when you have like 50-80%, which is not possible for you. So instead either use dollar value OR use that money for promotional items.
 
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