Minds On
Loyalty reward programs
Many companies use loyalty and incentive programs to offer consumers a perceived value for their money spent. Let’s explore the conditions and criteria of a rewards program offered at a local coffee shop:
- collect one point for every dollar spent when you scan your plastic loyalty card, and pay separately with cash, credit, or debit
- collect two points for every dollar spent when you scan your mobile loyalty card, and pay with the funds attached to your loyalty card
- collect three points for every dollar spent when you scan your coffee shop loyalty credit card-coffee shop credit card costs $49 annually with an APR of 22.99%. In addition to this, collect one point for every $2 spent at grocery stores and one point for every $4 spent elsewhere
Test Your Skills!
Think and reflect
Spend a few minutes considering each of these questions. Record short notes in an audio recording, on paper, or on a computer.
- Why might companies be interested in creating a loyalty/incentive program?
- Why might customers be interested in signing up for a loyalty/incentive program?
- Why do you think the amount of points increases between different payment methods? Why are customers collecting more points when they sign up for the coffee shop’s credit card?
- Who might benefit from this loyalty program? What should they be mindful of if they choose to sign up for the mobile loyalty card and/or credit card?
Action
Comparison of three loyalty programs
Many grocery stores offer loyalty and incentive programs to their customers. These loyalty programs differ in what they offer customers and can take the form of either a regular card or credit card. Let’s compare three different types of grocery store loyalty programs.
- earn one point for every $1 spent within the grocery store
- earn double the points each Tuesday
- spend $1,000 in your first month, and receive a 2,000 point bonus
- redeem 10,000 points for $100 off your grocery bill
- earn 2% cash back on purchases made in store
- earn 1% cash back on gas purchases from store B’s gas station
- sign up for the app and unlock weekly promotional offers
- receive $10 off your grocery bill on your birthday
- 1,000 point welcome bonus when you sign up and purchase groceries
- earn 50 points for every $25 you spend
- earn 100 points on weekly featured products
- redeem 12,000 points for $60 off your grocery bill
Complete the Comparison of Three Loyalty Programs Organizer in your notebook or using the following fillable and printable document for your thoughts.
1. If a shopper has spent $5,000 on groceries after three months, which of the above grocery store loyalty programs would be best? Justify your choice based on how they may have chosen to spend their money each month. Be sure to include sample calculations for each option.
2. Assess the advantages and disadvantages of each option.
3. What are some things to consider before signing up for a loyalty program?
4. How have the grocery stores in the example above incentivized and motivated shoppers to make purchases? Look carefully at the language used in each of the examples, and be sure to jot down some strategic marketing ideas that have been used.
Press the Activity button to access the Comparison of Three Loyalty Programs Organizer.
Activity (Open PDF in a new tab)Consolidation
Choosing a loyalty program
If you would like, you can complete this activity using TVO Mathify. You can also use your notebook or the following fillable worksheet.
When a skier was shopping for winter clothes, one website offered a VIP loyalty card that would give them a 20% discount on all regular price items.
On another website, the skier noticed an offer for a Smart Shopper card that would give them one free item once they purchased at least three items. This store stipulated that the least expensive item would be the free item.
On a third website, they were offered a Smart Saver card that would give them $25 off their purchase of $100 or more.
Which loyalty card should the skier sign up for, and why? Use calculations to justify your choice.
| Program | Offer | Calculations |
|---|---|---|
|
1 |
20% off all regular priced items | |
|
2 |
One free item for every three items purchased | |
|
3 |
$25 off a purchase of $100 or more |
Press the ‘TVO Mathify' button to access this interactive whiteboard and the ‘Activity’ button for your note-taking document. You will need a TVO Mathify login to access this resource.
TVO Mathify (Opens in new window) Activity (Open PDF in a new window)Reflection
As you read the following descriptions, select the one that best describes your current understanding of the learning in this activity. Press the corresponding button once you have made your choice.
I feel...
Now, expand on your ideas by recording your thoughts using a voice recorder, speech-to-text, or writing tool.
When you review your notes on this learning activity later, reflect on whether you would select a different description based on your further review of the material in this learning activity.
Press ‘Discover More’ to extend your skills.
Discover MoreDesign a loyalty program
A new food delivery service app has placed a new employee in charge of designing a loyalty program that will incentivize customers to make more delivery purchases. Over 250 restaurants offer their foods on this new app, but there are a number of restaurants that are struggling to attract and maintain loyal customers.
Design a loyalty program that will support these struggling restaurants, increase their weekly sales, and offer customers something of value.
What strategies should they use to attract customers, maintain loyalty, and ensure that struggling restaurants continue to be successful?
Connect with a TVO Mathify tutor
Think of TVO Mathify as your own personalized math coach, here to support your learning at home. Press ‘TVO Mathify’ to connect with an Ontario Certified Teacher math tutor of your choice. You will need a TVO Mathify login to access this resource.
TVO Mathify (Opens in new window)