CONTENT BROUGHT TO YOU BY: FitRewards
Imagine that you own two boutique coffee shops. One of your shops gives its customers a reward card with eight cups of coffee to punch. Your other coffee shop gives its customers a card with 10 cups of coffee to punch, but has the first two cups already punched. Which coffee shop do you think has more repeat customers?
A bigger question is whether a rewards program is the secret sauce to running a successful coffee shop. Yes and no. Loyalty programs are so prevalent that, according to Colloquy's 2013 Loyalty Rewards Census Report, there are more than 2.1 billion loyalty program memberships in the United States alone. Since the 1980s, when customer loyalty programs began to appear, customers have become accustomed to seeing rewards in a myriad of ways; they are spending their money, and gaining recognition and instant gratification in return. You will find rewards programs at your local coffee shop, large-chain grocery stores, department stores, cell phone providers and now at studios and health clubs.
These rewards programs work not because of marketing voodoo, but because of the way our brains are wired. The Endowed Progress Effect is a psychological effect that is simple but incredibly powerful. It means that when people feel they have made some progress toward a goal, then they become more committed toward a continued effort of achieving the goal. Perception is important, and the appearance of progress can have a strong effect while actual progress that is not recognized can be demotivating. The corollary is that people who feel that they are making little or no progress are more likely to abandon efforts. As people get closer to the goal, their commitment is likely to deepen as they strive harder to achieve success.
Anything that lets you achieve small goals in pursuit of a bigger goal is the Endowed Progress Effect.
Our job as health and fitness professionals is to keep our members and clients motivated. For more than 80 percent of Americans, an exercise routine and maintaining healthy lifestyle choices and habits are not fun activities and sometimes are torturous. The ability to deliver a motivational experience and help our clients deepen their commitment to achieve success becomes critical to our success. Rewards programs harness the Endowed Progress Effect and help create this opportunity.
When a person is awarded up front with free points, they feel the advancement toward a distant goal, and they are more likely to work harder and longer to achieve that goal. Revisit the idea of the punch card at the coffee shop. This tactic, also found at salons and restaurants, awards the customers with the first two punches on their card for free, meaning no actual purchase had to be made, are more likely to return. They do so because they feel vested in earning something, and the goal is that much closer than if they had to work to punch the entirety of the card themselves.
Apply this philosophy to a health and fitness club. When a member is rewarded for behaviors they are already doing, including checking-in for workouts, referring friends and family, and making purchases at profit centers, there is no work involved. Yet, that member is now more likely to get in an extra workout, refer another friend or family member, or make an additional purchase just to get closer to a goal in order to redeem their points for something they want, such as a name brand product or in-club service. Rewarding the member for just activating their rewards account with enough points to get them halfway to their goal is enough motivation to set them on track for working hard and earning the balance of points required.
Rockwell Collins Recreation Center in Cedar Rapids, IA, offers a rewards and loyalty program. Members are awarded 10 points for each daily check-in, if they check in 11 or fewer times a month. When members check in 12 times a month or more, they earn an additional 90-point bonus. Rockwell Collins experienced a 20 percent increase in usage of members using the club 12 times or more in a month from the first four months to the second four months of launching the program. Basic usage for 11 or fewer times a month also increased 36 percent from the first four months of the program to the second four months of the program. There was a 45 percent increase in members using the club 12 times or more in the month for two months in a row.
In order to leverage the psychological power of a loyalty program, customers must be able to see their progress so that they are motivated to reach the next milestone. As a club owner and operator, a key attribution of a rewards program is to ensure that you have enough motivational points to make the program stick and that those behaviors are recognized and rewarded quickly and automatically. If it is too much of a challenge, your clients will end up frustrated.
Rewards that are valuable to your customers and relevant to your business, such as personal training sessions, class pack cards, brand logo apparel or items from your supplement program, will drive the engagement in the program. This process not only dangles a carrot to keep your clients motivated, but it also recognizes your top spenders without having to discount your services. Rewarding your customers for purchases made at your profit centers will continue to drive them to those outlets and continually increase your revenue. Keeping rewards fresh is also important as clients will stay engaged in a program longer if they have something new worth working toward.
If your business delivers great value without a rewards program, then it is in your and your customers' best interests to build customer loyalty and generate more sales. A rewards program, if done right, can be a powerful way to do that.
Maria Parrella Turco is a fitness industry expert, owner of more than 10 studio and health clubs and the CEO of FitRewards. FitRewards develops affordable customized loyalty programs for fitness centers, studios and fitness professionals who are looking to gain more loyalty with their members and clients.