What you sow, you will reap. Nothing could be more truthful when it comes to expectations in customer engagement. Every customer has them, and sometimes we exceed them, create them, or fail to meet them. In loyalty and retention, expectation management is one of the constant tasks we review in to measure the success of how well your retention program is working. One of the most difficult expectations that marketers create is the expectation for rewards. Let’s look at a few ways that expectations for rewards can be a poorly planted seed in our customers mind and how to do it right.
The most difficult result of setting rewards in a loyalty or retention program, is that many times the initial trajectory is one of loss. Many loyalty programs think of discounts as rewards. This topic is explored in detail in our post, Never Discount Your Product, but here we must focus on the expectation that a discounting approach it sets. Discounts lower the expectation of value to your service or product. This is one of the difficult battles between value pricing and market pricing. If you are forced into market based pricing (i.e. commodity), retention is going to be harder to manage because price becomes a major driver for purchase and repeat purchase. Discounts have to be a component of your marketing strategy and advertising strategy, because everyone else is doing it and a lower cost keeps you competitive for new client acquisition. If you were in a value based pricing, you would never set an expectation for discounts, since your “reward” would shot your value in the foot. Ferraris never go on sale. There is a reason for that. Only when price is part of the purchase decision do discounts become prevalent.
The smarter marketer would really think through this process before using discounts as rewards. Are you setting the stage for greater loss by discounting? Once you set a discount, pulling back from that discount almost be impossible until you’ve made the migration to a value in the customer’s mind. Does your discount reward set the stage for engaging the customer on a value that no competitor can match? It should or it’s poorly set.
Set expectations you can meet successfully, without doubt.
This should be a very obvious note, but one worth mentioning. Whatever reward you set for your retention efforts, or in general, make sure you have 100% accountability and fulfillment figured out before offering it. There are case studies of rewards that were fulfilled poorly, or in bad timing. Make sure your system is executing to the expectation you set. The last thing you want to do is fail to met the own expectation you set.
Failing to met expectations
When you do fail, see it as an opportunity. Assume the customer is lost, and consider what you can do for your reputation. What do you want the last interaction with your customer to have in his mind? That they failed to deliver on a free bee, or they were out of stock of the item on sale, or your product or service was poor. This customer can leave your store with two different messages and you are in control of that choice. Doing what ever you can to go beyond the customer’s expectations of issue resolution should be your goal. When the customer talks to his friends and colleagues, what is the story you want him to tell? I would think it would be one of unmatched customer focus that takes the attention off your failure and resolves the issue clearly.
Rewards outside of expectations
One our favorite ways to reward customers is outside of expectations you’ve set. Customers who get points for every purchase, expect them with each purchase. In this expectation, the reward has a zero sum on customer experience. Consider this; have you received points just for being a great customer? You don’t have any expectations for that, so it would be viewed as a general surprise and exceed your expectations wouldn’t it? Expectations play a major part in how valuable rewards actually are to your customers. If you can find ways to reward outside of expectations, you will exceed expectations creating a positive value for your customer. And the great thing about these rewards is that the expectation for the reward to happen again is very low and you’ve raised the bar for a brief moment in time with out creating new expectations.