Thought you may be interested in the following dialogue…
E-mail from Vodafone PR…
“Vodafone has launched a new reward scheme for pay as you go customers, offering 10% back every time they top up.
Let me know if you have any further questions.
Then details of the press release were attached.
- Yes… Why doesn’t it just cut the price by 10%?
- “It’s a reward scheme – just like a Tesco Clubcard or Boots Advantage Card.
These ‘banked’ savings can then be put towards a new phone or Bluetooth headset, for example, not just to save on call costs.”
Of course any reduction is a good one, but like all reward schemes, the aim is to try and make something seem like a bigger offer than it is.
Rewards v just cutting the cost.
- For consumers: Cut the cost and everyone gains by the maximum 10%, and the money saved can be spent anywhere. With a reward scheme you must actively obtain the reward and you can only spend it on products the company offers.
- For the company: Rewards schemes mean the promise of goodies which oft go unredeemed, so there’s little cost, but lots of publicity and feel-good factor. Plus, since you can only redeem rewards on Vodafone products, the costs are reduced again. That’s because while Vodafone may sell something for a retail price of £10, its cost price is likely to be £3-4, so the cost to the company is far smaller than it appears.
As I write in the boost loyalty points guide, most reward schemes are simply costed in the product price anyway, so are generally (though not always) a false saving. Having said that, it’s always better to use a free loyalty scheme if you’re shopping somewhere that has one.