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Loyalty Program for a Rewarding Business
Implementing a loyalty program can turn sporadic customers into life-long customers.
A customer-loyalty program is any system you set up that rewards customers for faithfully choosing your products or services. It’s a win-win situation: the customer saves money and basks in the special attention he receives while you enjoy repeat business, increased profits, and a system to track your shopper’s purchase history.
Here are some examples of loyalty programs are listed below:
- Rewards and rebates – Under a rewards system, customers are awarded points when they spend a certain amount; once they’ve accumulated enough points, they can redeem a prize. This is a tactic most commonly used by airline and credit card companies, though some retail outlets also employ a variation of the rewards system.
One clothing company, for example, gives first-time customers of any of its affiliate stores a “value card” that tracks their purchases; any time the customer makes a minimum $11 purchase, her card gets stamped. Every 5th and 10th purchase gets her a special gift item; by the 20th, she gets a company discount card. Track cards are more convenient, and people are now keener to purchase from your stores because they can see their progress right away.
Variations to this system include giving out rebates, which is essentially a discount that is given after the payment is made. One health store gives all patrons a five percent rebate coupon for every $22 spent, which customers can use when they make their next purchase, thereby enticing them to come back.
- Partnerships – It’s common for businesses to tie up with other establishments to cross-promote products and services. For instance, new enrollees of this one playschool receive discount coupons from a baby store and a child photography studio as part of their “welcome pack.”
- Affinity – Within a business’ pool of frequent customers, there are those who spend even more than the rest. These high-value customers are usually pampered by the perks of an affinity program. They receive added benefits, special communications, bonuses, and gifts. A big Telecommunications company for example, is treated to exclusive perks and discounts from various high-end establishments.
- Creating a community – This is a good way to build brand loyalty and encourage customer participation. One popular example is creating an online community fan page on Facebook. You can post articles & tips, events and other updates regarding your promos. Members interact with each other by sharing how their transaction with your company was and giving feedback about your company’s product or services. Members get to attend company events for free.
- Member-Get –Member Program – Make your existing members advocates of your brand by rewarding them for every successful referral. Take this one health facility as an example, which rewards existing clients who bring in new business by giving them a special kit containing $83 worth of discount vouchers.
HOW TO SET IT UP
A full-scale loyalty program that involves coded magnetic cards (used by airlines and big multinational companies) costs millions to implement, requires installing data mining software like Oracle, SAS, SPSS, and Cognos, and entails hiring additional staff.
For small businesses, you can create your own loyalty program by making simple track cards or coupons. You can put together a database just by asking customers to fill out mailers and coupons detailing their purchasing behavior, and hiring one or two staff to encode their answers in spreadsheet software like Excel or simple database software like Microsoft Access.
SMS can also be an effective way to set up a rewards program and at the same time gather information about customers. For example, a diaper company recently invited customers to join their company club for free, simply by texting a number indicated in their product’s packs. Once they are members, they earn points for every purchase that they make, and these points are convertible to various gift items. In their text message, parents are asked to also provide their baby’s name and birthday – then that’s it! The diaper company now has its database.
PERSONAL TOUCH
Finally, whether your loyalty program is simple or high tech, don’t forget to extend loyalty-boosting gestures, such as training your remote staff to shower customers with personal attention or sending out emails or greeting cards during birthdays or the holidays. It is these little practices – more than amassing points or getting discounts – that cement loyalty.
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