How Customer Loyalty Programs Can Bring You More Business

Lee Polevoi by Lee Polevoi on April 3, 2012
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Repeat business deserves special recognition. You want to acknowledge and reward the people who help to support your small business — and keep them coming back for more. An effective way to show your appreciation is through a carefully designed and implemented customer loyalty program.

To ensure the success of this program, it’s vital to set clear goals, choose the type of program that best fits your business, identify your best customers, and then plan (and perhaps test) how to implement and market the program. Here’s how to get started.

Set Clear Goals

The goals for starting a loyalty program may vary, but should include:

  • Boosting sales to existing customers
  • Finding new customers through referrals
  • Lowering marketing costs
  • Encouraging customers to purchase additional products and services

Once the program is under way, you should also strive to gain a deeper understanding of your customers’ needs and develop closer relationships with the people who matter most to your business.

Choose a Loyalty Program

What kind of loyalty program would work best for you? Many businesses offer special rewards or discounts. Take, for example, the Subway Rewards Card Program, which enables cardholders to accumulate points with each sandwich purchase. These points may be redeemed later for free menu items. Other types of programs include frequent-buyer clubs, buy-one-get-one-free offers, and time-sensitive discounts available only to frequent customers.

Other companies opt for special communication with top customers instead of mounting large-scale loyalty programs. They send personalized thank-you notes when customers make a large purchase. They generate automated reminders (a postcard or an email) that offer discounts or freebies on special occasions (such as a holiday or birthday).

All of these efforts recognize the customer’s value, build good will and, of course, generate more business.

Identity Key Customers

Whatever program you choose, it’s critical to identify who your most loyal customers are. Consider which customers generate the most profit. Note that these are not necessarily the ones who purchase in the highest volume or with the greatest frequency. The right customer relationship-management software can help you analyze customer buying habits and identify your ideal targeted audience.

Next, determine what customers like most about your product and what special offers might appeal to them. You can gather this data by asking customers while they’re in your store and/or sending out a postcard or brief email to obtain more detailed responses. The information you get will help you design a loyalty program that’s likely to yield greater buying activity. It will also help you assess where best to allocate your marketing resources.

Plan Ahead — and Get Everyone on Board

Once you’ve identified your most loyal customers and chosen the program that makes the most sense, you’re ready to go. If your budget permits, set up a CRM software system that enrolls and tracks the activities of these customers. Software for automatically contacting the target audience and running analysis reports is also a good bet.

Three additional tips:

  1. Make sure everyone on your staff understands the value of the loyalty program and is committed to promoting it. Without their active involvement, you might miss some of the people you’re most interested in reaching.
  2. Draw up a timetable for loyalty program events and notices. Include your suppliers and vendors in this effort by offering to showcase their products to your elite group of customers.
  3. There’s no need to blanket the planet with your first loyalty program effort. Consider doing a pilot program that targets a small group, so that you can work out any kinks in the system before planning a full-scale launch.

Remember, your primary goal is to give your best customers an irresistible incentive for doing more business with you. With the right program in place, you’ll likely be surprised by customers’ enthusiastic response.

Lee Polevoi

Lee Polevoi is an award-winning business writer specializing in the challenges and opportunities facing small business. He is former Senior Writer at Vistage International, a global membership organization of CEOs.

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