Advantages of using customer loyalty programs

I was just at Petco to buy dog food, and the cashier asked me if I wanted to join their customer loyalty program. All it took was my phone number and email address, and I would earn money back on all of my purchases. Since I am the companion to a few dogs and two horses, it’s a win, win for me. Why does Petco do it? They know I am choosing Petco over the grocery store for my dog supplies now, and with the money back program, horse supplies are less expensive, easier to find in the store, and more convenient to shop.

Customer loyalty programs are showing up everywhere. It used to be only big companies like Starbucks or Best Buy who offered the programs, but if you have a company that provides excellent customer service experiences, these loyalty programs can keep existing customers, build loyalty, and increase new customers even in a recession. In addition these programs can provide a great measuring tool. In other words, the loyalty program shows customers how deeply respected they are, while at the same time, the company is able to track, and identify customer habits such as spending, behaviors, and trends.

Small businesses should not get scared that implementing a customer loyalty program could be too expensive. If it costs five times as much to find a new customer when you lose an old one, then reward programs are indeed worth every penny spent. So how do you go about having one? Here are a few examples:

• Membership programs provides special incentives. (Costco)
• Rewards programs gives you gifts, perks, or cash back depending on how many points you have “earned” by the amount of business you do.
• Community programs offer charity sponsorships, demonstrations, and emergency charity drives.

Before you embark on these new programs, make sure you have instituted the basics which will ensure success of your loyalty program. Customers need a reason to be loyal, and that begins with integrity. All program benefits should be disclosed prominently on your website so members know if there are any restrictions. The quickest way to lose a customer and have that loyalty card wind up in someone’s junk drawer is to have too many exceptions, which should relate to clear customer communication. It’s so easy to communicate with someone once you have their email address, and doing it through newsletters, and promotional updates provide an interesting and upbeat way to stay in touch with all of your loyal customers. Make sure the redemption options are kept relevant and attractive, and when one of your loyalty customers calls or emails your company, make sure that your employees are able to respond and act accordingly. Empower all of your employees with knowledge and the ability to resolve issues immediately.

photo credit: Adam Jones, Ph.D.

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