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Home /  LATEST NEWS /  Rewards, not discounts!
BY MICONEX ON 20/07/2019

Rewards, not discounts!

Ask any place manager or BID manager if they’ve considered putting in a discount scheme for their town or city, and it’s a safe bet that the answer would be yes. Everyone loves the idea of the discount app or website, brimming with special rates that will lure customers to the high street.

But if we take a closer look at discount schemes, it’s clear that the way is lined with pitfalls and difficulties. (However, there’s a much more efficient, measurable and easy way to enrich spending and allow you to plan effectively for your town or city – more on that later!).

Constant updating

Getting out there and sourcing 30 to 50 offers to kick the project off is quite possible. It’s a lot of
hard work, but it’s possible. You then focus on promoting the programme, but things start to change. Businesses close and change owners, managers and staff change, products and services change, prices change. Do the businesses remember to update you? Will they respond to reminders? In our experience only about 10-20% of the participating businesses will be engaged enough to do this.

Tough training requirements

With discount schemes, the usual objective is to get as many businesses involved as possible. The shopper is then asked to show an app, or a “loyalty” or discount card, to the person at the Point of Sale. This means that you need to train every member of staff in every participating business to know what to do when it’s presented. Good luck keeping on top of that! And if staff don’t know what to do, it causes embarrassment for the customer and the staff member. The customer is unlikely to use the scheme again and it could damage their relationship with that business.

In short, discount schemes can create some positive short-term PR but over time they decay, leaving a legacy of dispirited businesses. The next project then becomes harder.

Where does it stop?

Having owned a retail business myself, I can guarantee you that it does not make a business owner’s day when a customer shows an app or pulls out a voucher which entitles them to 20% off. That’s a hefty chunk off their margin and it can feel like a race to the bottom. If their competitor has a great discount offer, then how do they respond? With an even better offer?

Low redemption rates

Then there’s the question of whether consumers even use them. All the stats gathered tend to focus on downloads, user sessions, etc, and very rarely on actual redemptions of offers. If offer redemptions are ever published, they are spectacularly underwhelming. The truth is that the savvy shopper is bombarded with great offers all the time. Sometimes a big-name shop can seem to be competing with itself across several platforms – web, social, email – to give customers the best discounts! 

Risk to your organisation’s reputation

If you ask businesses to come up with a great offer for your app or website, you are setting their expectations. If nobody takes advantage of the offer, as far as the businesses are concerned it’s you, that’s got it wrong.

Your town can feel less special

A major discount scheme can damage your place as a brand. We want people to see our towns and cities as amazing and unique places to shop and enjoy, but the opposite effect can happen if a huge amount of them are willing to discount their goods and services! Conversely if only some of the businesses provide discounts you may end up not promoting the best that your town/city has to offer.

Offering discounts where they’re not needed

If a discount scheme that is open to all truly takes off, the inevitable outcome is that, due to the increasing awareness of the offers and discounts, the regular customers who would have been happy to pay full price will be benefiting from a discount. What is the overall economic impact of this type of project?

Mi Rewards is different

So much for the negatives associated with discount schemes – the great news is that there’s now an effective, simple, measurable alternative. At Miconex we focus on ways where we can clearly add value to a local economy and have developed a completely different approach. It’s called Mi Rewards – Points, Perks and Prizes, and we’ve just launched it in our home city of Perth.

How does it work?

Customers register online, simply and quickly, and link one or more of their debit or credit cards to their Mi Rewards profile. Then, when they shop, they earn a point for every pound they spend. When they have enough points, these can be converted into a gift card which can be spent back at participating business. In addition to this, Mi Rewards customers also receive perks, event tickets and random acts of kindness just for being part of the scheme. What’s more, they don’t have to carry a loyalty card or remember to spend a discount voucher within a time limit.

Not only is Mi Rewards highly rewarding and simple for customers, the benefits for your place and its businesses are clear too:

  • It gives a positive glow to the reputation of your town and your BID: “Look at all the great places you can shop, dine and enjoy.  We want to reward you as you enjoy our town/city!”
  • Once registered, consumers automatically earn 1 point for every pound they spend, no need to show any cards or apps.
  • Businesses do not need to create any new offers or discounts.
  • No extra staff training is needed. The businesses don’t have to do anything other than register.
  • If managers leave, new staff arrive, or products change, nothing on the Mi Rewards programme needs to be updated. 
  • Usage is consistent and high, as points are earned automatically every time a linked card is used in any participating business. 
  • Attrition rates are very low, it means that the number of participating (not just registered) consumers continues to grow.
  • When customers spend their ‘earned’ gift cards it stimulates new trips into town, encourages consumers to visit new businesses and to spend more of their own money.
  • When customers get additional perks and prizes, other consumers are encouraged to register.
  • Your BID or town/city can identify who is spending money, where and when. You’ll be able to track how events, marketing, new attractions and even planning decisions all affect consumer spending. 
  • You can use the data to identify different customer segments, test propositions and stimulate additional economic activity.

I’d say that’s a lot of positives! It’s exciting that we’ll be able to track consumer spending even more effectively in Perth, as well as invigorating our city and rewarding our shoppers. 

We are working with other towns and cities to explore how this might work for them but we are very keen to hear from anyone that is interested in finding out more.  Please contact Miconex - [email protected], 01738 444 376 or email Colin Munro (Managing Director) directly at [email protected]