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I am sure that at one time or
another your company has had,
does have or has previously
considered the pros and cons of
a frequent buyer program. Until
recently, I never gave the topic
much thought, as I was under the
impression that most retailers of-
fered customer award programs
in some form or another.
My initial impression re-
garding such programs is that
they were designed to foster
customer loyalty, encourage
frequent shopping and reward
good customers. I believe that
some retailers have begun of-
fering frequent buyer programs
simply due to the fact that many
POS systems can now track
the “points” automatically, thus
eliminating the need for punch
cards or barcoded plastic tags
cluttering key chains.
The reality may actually be
that they just didn’t want to miss
the frequent buyer bandwagon if
everybody else was getting on.
What I didn’t stop to realize is the
cost associated with many such
programs; that is, until I received
a phone call from a client inform-
ing me that they were stopping
their frequent buyer program
immediately. The reason wasn’t
maintenance, confusion on the
backend or lack of customer inter-
est. It was cost, pure and simple.
By “cost” I am not referring to ad-
ministrative expenses incurred by
the program, but rather the cumu-
lative effect the rewards earned
cost when charged against either
a marketing expense or realized
as a markdown.
My first reaction was, “Do you
think you will lose customers”?
Answer: “No, I don’t think we will.
Our stores have a loyal following,
and I believe they will shop with us
for the products and services we
will continue to offer.”
What about customers al-
ready in the program that have
accumulated points? Answer:
“We will continue to honor the
points our customers have
earned, but we will no longer
offer the current program to new
customers.”
I decided I would do a little
research on the topic. I asked
friends, relatives, clients, and
retailers of all sorts what their
opinions were of these pro-
grams. The answers I received
ranged from “We don’t have
one” to “We are considering
putting one in” to “We used
to do this, but found it to be
too expensive.”
Rules and
more rules
All of the stores I queried on
this topic had a different set of
rules on how the program was
to be used. Some were straight-
forward, while others seemed
somewhat confusing. Some
computer POS systems do a su-
perior job of tracking the needed
customer information, some not
so much. A few stores still use
punch cards, potentially creat-
ing an opportunity for fraud and
abuse. One merchant had a rule
that stated even if you had accu-
mulated enough points for your
By
Ritchie
Sayner
Reconsidering Frequent
Buyer Programs
BACK
OFFICE
Inside
Outdoor
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SUMMER
2017
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