Over the last two decades, customer loyalty programs have exploded.
Consumers under 30 probably don’t remember a time when they went to a supermarket and bought groceries – or fixed your car or checked into a hotel – without showing a customer loyalty card.
For big corporations, the value of customer loyalty programs is hotly debated. Consumers are now overloaded with programs, frustrated keeping track of points, or just plain jaded. And it doesn’t necessarily make you more loyal to your airline when you can never actually secure a reservation to use your frequent flyer points.
But for small companies – especially retail and service businesses – loyalty programs can be an effective and simple way to keep customers coming back. The key is to keep your loyalty program simple, and be clear on what you’re trying to achieve.
The best reason for a small company to implement a loyalty program is to keep clients coming back. As a small business, it’s hard to compete with the big stores or corporations with large advertising budgets. Offering a simple reward punch card at your sandwich shop – for instance, one free sandwich for every ten purchased – may keep a customer from going across the street to the fast food store.Here are some examples of simple but effective loyalty programs that work well for small businesses:
Pre-purchase discount: For example, a coffee shop could sell a pre-paid card for coffee and give one free drink at the time of purchase. Pre-purchase discounts are cost-effective and cash-flow positive for small businesses. The money is in the bank now, the benefit is immediately apparent to the customer, and if the customer fails to use all their products or services, you’ve increased your profit margins.
Cash reward after reaching purchase level: A beauty store can offer a credit after a certain amount of merchandise is purchased. Customer generally like getting a cash amount to use, and always buy something they would not have otherwise, such as a gift.That increases sales as well as keeping me loyal.
Other gifts, upgrades, special treatment: Giving extras to your most loyal customers may cost relatively little but have great impact. For small companies, frequent buyer programs could mean free alterations at a boutique or dry cleaners, free desserts with meals, or other unexpected bonuses.
Punch card loyalty programs are easy and cheap to implement. Just work out the sales level you need to justify the reward or discount, print out cards, and purchase a speciality hole punch with a unique shape to discourage dishonesty. If you are concerned about customer dishonesty, simply keep the cards at your place of business rather than give them to the customer.
Giving customers loyalty cards to carry with them does have a benefit of ongoing advertisement for a business.
Regardless of the type of loyalty program you implement, you still must offer good products and great service. Remember, you’ve got to be loyal to your customers if you want them to be loyal to you.