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Most people have at least one loyalty card in their wallet, and probably several loyalty tags attached to their key ring. Whether for a coffee shop, a grocery store or an airline, these programs allow us to get discounts or earn points at certain retailers. Should your small business start a loyalty program? Here are some things to consider.
Loyalty programs that reward customers for repeat business can be hugely successful, and they aren’t just for airlines and large national companies. They can also keep customers coming back to their local beauty shop or car wash, and a program can be started with a very small investment.
The first step is to determine whether a loyalty program is a good fit for your business. If you sell large-ticket items that people only buy once every few years, it wouldn’t make sense, but if you serve the same customers often and would like to earn and keep repeat business, it makes sense to investigate this option as part of your marketing plan.Which Kind Will Work for You?
Loyalty programs range from simple punch cards to expensive customer relationship software. Here are some examples:
These tried-and-true solutions are a good place to start for a small business like a donut shop or beauty salon. They offer the advantage of being cheap to initiate and easy to maintain. Disadvantages are that cards are easy to lose, and they don’t give you the ability to track any customer information.
Customers showing a loyalty card can receive a discount, which can be a powerful incentive to return to your business instead of going to a competitor.
Points for purchase
These programs use software to track purchases by customers who joined your loyalty club. After reaching a certain threshold, they can use points to get rewards or free merchandise. The ability to track purchases can provide valuable information about customer preferences.
With more and more people using smart phones to locate local businesses, it makes sense to investigate whether a mobile app for customer rewards will work for your company. Belly, Front Flip, LoyalBlocks, Perka, SpotOn and many others offer programs at a relatively low cost that may also include tools to help you track customer behavior.
By getting together with another business in a similar field, you may be able to develop some synergy. For example, customers at your pet store can get a discount at the local vet, and vice versa.
Opt-in program for email offers
Collect email addresses so you can send coupons or special offers to your “preferred customers.” These targeted emails have a much greater chance of success than emails shotgunned out.
Rewards must be reasonable
The customer must believe that it’s easy to get the reward, but you don’t want to give away too much. For example, “After 9 carwashes, you get 1 free” makes more sense than “after 50 carwashes” or “after 2 carwashes.” Find a number that works for your company, and adjust it later if necessary.
Offer an incentive to join
One important reason to have a loyalty program is to gather information about your customers, but they may be reluctant to take the time to fill out paperwork or to give you their personal information. Encourage them by offering an immediate discount or a free item.
Make your program creative and fun
Anyone can give a 10% discount, but if you offer a chance to spin the Jackpot Wheel and win a prize, people will remember you.
Make exclusive offers
Everyone wants to be a VIP. If you have the ability to segment your customers, offer rewards or special sales just for those in your highest tier.
Add value by offering unique experiences
For example, members of the loyalty program at your pet grooming salon could be invited to an obedience class with a professional dog trainer.
Make it easy to opt in
Have opt-in forms to your loyalty club available on your website, at your cash registers, and anywhere else you interact with the public. Be sure to ask for email addresses so you can add them to your email distribution list.
Communicate regularly with your customers
Send them emails with useful content (not just ads and coupons) and ask for feedback to help you tweak your offerings according to their preferences.
Track your success
If your program provides feedback, measure how many people are using the program and how their behavior differs from non-members. Then you should be able to determine if it’s worth the cost of continuing.