Pros And Cons Of Client Incentives

What sort of rewards programs do you offer your most loyal customers?

During the holidays, Starbucks conducted a contest. Each time you paid with your mobile app or Starbucks card, you received a “present.” Each present had a game piece. If you got three game pieces in a row or earned a bonus star, you had the chance to win free Starbucks for a week, month, year or for life.

Did the consumer actually think they would win Starbucks for life? No. Did they keep buying their daily coffee anyway? Yep. So why not try to earn a few rewards for more coffee along the way?

Take Subway or Marcos for other examples. When you order a sandwich from Subway or a pizza from Marcos, you receive a stamp card with room for multiple stamps or hole punches. When you bring the card for your next order, the stamps add up and, after five, you get a sixth purchase (sub or pizza, in this case) for free.

These aren’t the only places you will see contests or rewards programs. Credit card companies give cash back or air miles, retailers send out more coupons, grocery stores offer bonus points and fuel incentives and hair dressers offer discounts for referring new clients. Even the mechanic shop down the street has some sort of incentive to get customers to come back.

So is it worth offering your customers a reward if it helps to get their return business? Rewards and freebies never seem like a bad thing, but there are pros and cons. For example, a few years ago, J.C. Penney changed strategies and offered everyday low prices, removing coupons from their marketing strategy. The plan didn’t work out very well, and now coupons are back.

Pros of loyalty programs

Trying to get consumers to spend money is both easy and difficult at the same time. Having incentives and rewards helps encourage customers to keep spending money with you, month after month or year after year.

So how can the landscape industry adopt this strategy? Recently, a contractor wanted to use a rewards program to encourage his clients to choose a full-maintenance package. One perk offered to the client could be 1 to 2 percent off the total cost.

Many landscape business owners rely heavily on referrals to generate new business and make new customer contacts. Offering a referral bonus to clients who share your services with others can increase your business exponentially, so returning the favor with a small reward can be worth it in the long run.

Instead of a points system for client rewards, some landscape contractors simply offer special discounts to their most loyal customers.

One contractor offers his clients 10 percent off any work the clients schedule in January or February. This discount helps his crews stay busy during the slow season and encourages clients to get work done before the rush in March and April.

Other landscape contractors offer loyal clients discounts on enhancement services. Say a client signs on for the full-maintenance package, the contractor might give the clients a free plant or the last cut of the season for free.

Haircuts and oil changes are inevitable, just like taxes. Landscaping should be in that category, too.

Clients know they are going to continue needing landscaping services, so a rewards program (along with good customer service and quality work) helps convince them to remain loyal to you and to your company only.

Plus, extra perks for clients can separate you from the competition down the street. Maybe the competition’s pricing and services are similar to your company, but you can market yourself differently by offering rewards.

Rewards don’t always work

There are a few downsides to rewards programs, and it’s up to you to determine if the benefits outweigh the negatives for your business.

Depending on the size of your operation, rewards and incentives might not be useful marketing techniques. Great customer service and relationships are what keep clients loyal year after year.

Some contractors suggest offering an overall price reduction if a discount or rewards program is going to make or break a customer’s decision. If your pricing is already too high compared to the competitors, the market might be telling you to lower your prices.

In most beginning economics classes, the professors will say: “There’s no such thing as a free lunch.” Nothing is completely free.

The same is true in your landscape business. If you offer clients a discount, you have to make up the costs in another way.

One side effect of loyalty programs is they can be viewed as a “gimmick” to get the consumer to spend more, which might be a turn-off to some people.

A third-party company can help run the loyalty program for you, but will most likely collect your client’s personal information as well. Some retailers and banks sell consumer information about spending habits to these third-party companies to create the rewards programs.

The benefits of a loyalty program will only shine through if you already have excellent customer service. Build customer relationships first, then focus on marketing with loyalty programs that could potentially help your business.