Simple Tips for Customer Loyalty Programs

April 7, 2009 at 5:00 pm Leave a comment

 Coffee Shop Owner

There was a segment today on Good Morning America about discount cards and it reminded me that a simple loyalty program can be an effective marketing tactic for a small business.

Loyalty programs are about understanding your customers’ buying behaviour including how much they buy, what they buy and what they spend. Once you gain an understanding of your customers’ attitudes and behaviour you can more effectively communicate with them based on their needs and wants.

Before you develop or a customer loyalty program in place, you might like to consider the following:

Retention of Customers
Any existing business needs to be concerned about retention of their customers. Loyalty solutions for small businesses such as off the shelf and SaaS software are now available and have simplified the process of implementing your own loyalty program.

Treating Customers Differently
All businesses have top customers that contribute the majority of their revenue and profit. A customer database can help you identify your most profitable customers and develop programs that provide special benefits and services to reward these customers for their loyalty. Resources can be allocated to these top customers that you can not afford to spend on all your customers.

What Do You Want to Achieve?
Before starting any loyalty program it is important to determine your loyalty program objectives i.e. what do you want to achieve? The definition of loyalty may vary depending on the type of products or services you sell and whether you sell to consumers or businesses. For example:

  • Do you want customers to purchase more often?
  • Do you want your customers to purchase more of one product or service (up-sell)?
  • Do you want your customers to purchase other products or services in your range (cross-sell)?
  • Do you want your customers to purchase your premium priced products or services?

Ease of Use
It is important that any loyalty program is simple to use and will generate rewards for your customers in a timely manner. Loyalty programs that are hard to attain can generate a negative feeling amongst customers and may be detrimental to your business in the long term.

Customer Relationship Management Software
It is possible to purchase software that focuses on customer relationship management (CRM) and customer loyalty. CRM software offers a way of capturing customer information, sorting information, conducting mailings and producing reports. Research the range of software available and determine which one will best meet your business needs. Most software companies can provide you with a free demonstration or trial offer of their product to make your decision easier.

Tracking Results
It is important to track the results of your loyalty program to determine if it is having a positive impact on your business i.e. are the benefits outweighing the costs of running the program? Tracking will also help you to identify customer behaviour patterns that you can use to increase loyalty and improve your profitability.


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Entry filed under: Customer Relationships. Tags: , , , , , .

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