What Can Rewards Do for You

Friday, February 20, 2015

In our three-part Heartland Rewards blog series, we’ll arm you with the information you’ll need to build an effective rewards program. The reasoning behind rewards programs is simple: Reward your customers for continuing to purchase at your business and you’ll get rewarded with more sales.

Take for instance Starbucks: The mega-chain’s My Starbucks Rewards boasts more than eight million members and has seen huge growth—up 23 percent in the first quarter of 2014 alone. The company cited the rewards program for much of its growth in revenue and profit in 2013.

Another example is Best Buy, which increased its reward points by 25 percent in 2013—to the great delight of its customers and the chagrin of competitors Amazon and eBay.

So, what can a rewards program do for you?

1. Drive Increased Revenue

A rewards program is a proven way for small- and mid-sized businesses to sell more and increase the spend amount for each customer. In fact, rewards program members spend between 30 percent and 100 percent more than non-member customers in addition to purchasing more frequently.

A recent Manta & BIA/Kelsey report found that a 5 percent increase in retention could lead to a 25 percent to 100 percent increase in profitability. This fact was illustrated by Starbucks’ impressive revenue growth in 2013 and 2014.

2. Create Brand Awareness and Affinity

There’s no question that a well-executed rewards program is an effective way to build brand affinity, also known as “customer goodwill” or “the warm fuzzies.”

Making your customers feel special through rewards is the first step in brand awareness, as happy customers become excellent ambassadors for your business. Social media, mobile applications and other technologies also help to tie your brand into the daily routines and activities of your customers.

A rewards program is also a great way to introduce your brand to new customers or lure them away from competitors, as nearly half of consumers will switch brands based on potential reward benefits.

3. Provide a Competitive Advantage

As the Best Buy example illustrates, a popular rewards program can be a major competitive advantage. This is even more so for smaller businesses. The cost of retaining customers is as little as one-fifth the cost of acquiring new customers , which can be difficult in local or regional markets.

Customer data can be used to help you find better and more cost-effective ways to meet the needs of your market. That’s a major competitive advantage over other businesses that don’t offer rewards programs.

We’ll discuss how to gather and utilize your customer data in the next blog post on our Heartland Rewards series. Stay tuned!

Learn about Heartland’s Reward Programs

Part 2: Do You Know Who Your Best Customers Are?

Part 3: How to Take Your Relationship(s) to the Next Level


  1. Marder, Andrew. “How Starbucks Is Keeping Us Hooked.” Investing Commentary. The Motley Fool, 10 Nov. 2014. Web. 04 Dec. 2014.
  2. Reilly, Mark. “Best Buy Ups Ante on Reward Zone Program – Minneapolis / St. Paul Business Journal.” Morning Edition.
  3. Minneapolis/St. Paul Business Journal, 4 Apr. 2013. Web. 04 Dec. 2014.
  4. Burns, Susan. “From Our Table To Yours.” Rewards Network. N.p., 12 Feb. 2013. Web. 30 Nov. 2014.
  5. Martinuzzi, Andre, Robert Kudlak, Claus Faber, and Adele Wiman. “CSR Activities and Impacts of the Retail Sector.” Research Institute for Managing Sustainability (RIMAS). Vienna University of Economics and Business, 2011. Web. 30 Nov. 2014.