What's better a rewards program or sending out coupons?

There are downsides to coupons as well. Coupons make sales tracking a bit harder. For example, are people coming in because of the coupon or the great service or product you are offering? Since coupons can give your business a quick jolt of sales, they are often abused. That is to say coupons are used too often. The over use of coupons could train your customers not to frequent your business unless there is a coupon available, thus leading to a state of constant coupons. Sometimes coupons can put you and your staff in uncomfortable situations with expiration dates. It is somewhat a double edged sword; if you dont allow an expired coupon will you miss out on a sale, will you anger the customer, will you lose a future customer? Sometimes it's best to just accept the expired coupon but then if you always accept them why even print an expiration date? If you do send out a lot of coupons you also run into the issue of using more than one coupon at the same time. Even if you explicitly write only one coupon per visit or something like that, inevitably you will be putting yourself or your staff in the previous talks with customers wishing to use more than one coupon at a time.

Rewards programs are designed to encourage repeat business and foster loyalty, helping to increase the lifetime value of customers. Businesses can gather valuable data on customer purchasing habits, allowing for more targeted marketing and personalized offers. Rewards programs can enhance brand engagement through incentives that encourage customers to interact with the brand more frequently. While the initial setup may require investment and ongoing management, rewards programs often lead to sustained revenue growth over time. You can also target specific times of day to increase sales with rewards programs. One program that I have seen boost lunch sales at restaurants, which is not always super busy, is buy 5 lunches and get 6th Free!

Coupons usually give you a quick sign they are working. Conversely Rewards programs are a long term investment. You have to stock up on rewards, implement the system, and educate the staff before you even see one bit of result. Managing a rewards program can be more complex and potentially costly, as businesses must balance rewards given with customer spending to maintain profitability. One balancing act to manage is making the reward not too hard to attain or too easy to achieve. Too easy to achieve you could actually lose money on the rewards program. However, if the reward is too hard to attain and you will scare customers away from the program.