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Should retailers give instant discounts or loyalty rewards to customers?

The work at Taggo requires me to go around talking to retailers. The common question I get from retailers is that should they provide instant discounts or offer loyalty rewards to their customers?

A quick survey on Facebook showed that 17 of my friends prefer instant rewards opposed to two who said they would like the retailer to reward them on their fifth visit.

You can take the survey at

The cost of providing the loyalty reward is no different from offering an instant discount. 

Let's take a SGD5 mug of coffee for example. Say you return to the coffee shop after your 5th time to collect the free mug of coffee, you would have spend SGD25 at the coffee shop. So the free sixth cup of SGD5 coffee would out to a 20% discount from the retailer.  That would be the same if the coffee shop gave 20% upfront. 

Sub-consciously, most consumer will do the maths and ask themselves and ask, "Why can't I have the 20% now instead of having to collect it after my 5th visit?". This itself defeats the purpose of loyalty.

However, we found that most customers would appreciate that the store gave the discount immediately. 

For the consumer, it is easier to remember that this shop gives 20% discount than to remember how many more visits do one need in order to claim that free cup of coffee. 

If the shops were to give 20% discount upon instant purchase, it is only fair that the shops get something in return. This is done usually when the shops ask their customers to join their VIP club or Fan Club. 

Most of the success we have at Taggo with the shops are those who give straightforward discounts with no other messy qualifiers to enjoy the discounts. All they need is to join the shops' fan club and get the cashier to check them in. 

Customers get the discount, the shops get new fans plus a wall post and sponsored stories which advertises the check-in for all the customers' friends to see.

We do discourage shops to put in messy qualifiers, like giving the discount after multiple visits or benefits that only occur at certain times/date, for customers to enjoy instant discount as these qualifiers can be perceived by customers to be put in place to prevent them, the customers, to enjoy the discounts in the first place. 

Customers today are spoilt by the Internet and Facebook where they can get instant results and gratification. Why shouldn't this instant gratification be awarded to customers too?


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