I re-architected the logic of a retail customer engagement program — the results proved the point
Back in 2013 I worked at Sears Holdings HQ in Chicago area. During a store visit I learned about their customer survey reward program. The program was designed in the following way:
1) When a customer bought something in the store, there was a survey he or she could fill out. There was a web link and a special code at the bottom of each receipt that they could use to log in. They would go to this link and fill out a few minute survey about their shopping and checkout experience in that particular store.
2) The incentive for the customer to do that was a quarterly $4,000 draw from all survey participants, a lottery basically. If they pulled out your name, you got 4K worth of store credit to spend at any Sears store or website.
When I first learned about this, I redflagged the logic right away. Several things didn’t make much sense.
1) The wait period was too long. In the age of instant gratification that we’re living in, very few people would be willing to wait for up to 3 months to get the results of the draw.
2) The longer the wait period, the more participants would be there and therefore the lower the chance of winning. Most people can easily connect these dots and get turned off by that.
3) $4,000 is a lot of money and it’s really hard to spend it all in one setting unless you’re on a mission. Although Sears sold a lot of high ticket items (fridges, lawn mower tractors, etc), I was told by people in the field that most of the winners didn’t spend it all at once. This also meant that it defied the purpose of this coupon type program where you give customers a financial incentive to come back to your stores and they normally would spend more than that amount. With 4K though, it was very hard to go over.
4) When you have only 4 winners during the year, it means that only 4 people will have an incentive to come back to your stores/website through this particular program. We also lost out big on the word of mouth opportunity. When people win something, they tell their friends, post it on social media etc. 4 people really sounded like nothing.
5) The 4K award, as nice as it sounds, didn’t seem very real to me from the perception standpoint. Of course, they would give it to you if you win but in reality, the higher the promised amount of free money, the less credibility people have towards it and therefore less willing to act on it.
I packaged all of my thoughts above in a letter to the SVP of retail stores and suggested to make it a weekly draw and make the reward amount around $300 (to stay within the current $16,000 budget). My reasoning behind this was that people would perceive it as a more real thing with much less wait time and still a rather good incentive to spend a few minutes of their time to take the survey. Sears on the other hand would benefit from at least 52 customers a year who would come back to the stores, spend all this money in one visit plus possibly more (if you buy a 1–2K fridge for example) and they will tell all their friends about it. It just made a lot more sense.
My SVP took a few days to float the idea through the executive suite and not only they gave it a green light, they also upped the weekly award to $500 to make it more appealing.
The results of the new weekly draws were incredible. I got so many calls from regional district managers and VPs who thanked me for it. They also told me all these stories where many happy winners were spending several times more the prize amount in the stores. Some bought a $1,500 set of washer and dryer, others bought a $2,000 fridge, and so on. The number of surveys increased by triple digit % as well. The results were solid all around.
The point here is — any customer facing program needs to be designed in a way that sounds as real and tangible to the customer as possible. You may think that “it’s logical” that people would be attracted to larger money amounts but in reality it may not be the case.