“Businesses with loyalty programs, on average, are 88% more profitable than competitors who do not” ~ Deloitte Retail Survey

They are everywhere these days, used by many of the big companies, and more and more of the smaller ones. From punch cards (buy 6 get the seventh one free) to free cash (1% back for every dollar spent), from frequent flyer miles to hotel nights for free, it seems our wallets, key chains, purses and smart phones are full of them. I can even get a free haircut after I pay for 10, although I’m not sure I’d take advantage if I came out looking like Christopher Lloyd in the Back To The Future movies.

Of course I am talking about Loyalty or Reward programs. Companies are doing everything they can to keep their customers coming back again and again, and these programs can certainly help.

Some businesses and professions are even offering referral fees if you recommend them to family and friends.

But if the customer service or the products are not good enough to keep your customers, these programs are a waste of time.

The ultimate goal of any loyalty program is to promote your brand and create awareness, as well as building a loyal base that will endorse, market and support your company. All while not affecting your bottom line significantly.

One of the earliest programs was collecting S&H Green stamps from participating merchants, putting the stamps in individual booklets and redeeming them for products in special stores. And when the airlines deregulated in the late 70’s, the Frequent Flyer programs began to appear and became very popular. Now it seems every business or industry has some type of loyalty or reward program.

So if you want to have a successful loyalty program, what should you do and how should you start?  Keep in mind these important points:

  • Make it easy for the customer. Don’t make them jump through hoops, or have to remember to bring anything with them. With today’s technology, it’s easier than ever. With one of my favorite restaurant rewards program, the only thing I have to remember is my cell phone number. They do all the rest.
  • When signing people up, try and get email addresses. This way you can stay in touch, and offer special deals and promotions.
  • Think about having a tiered program, where the more a customer spends, the more benefits they get.
  • If you are going to charge for a loyalty program, make it worthwhile. Amazon got it right with their Amazon Prime program. They keep adding more and more benefits.
  • Try and collect as much data from the program, and use it to your advantage. Find out the wants and needs from your most loyal customers, and then deliver.
  • Use social media to connect with your customers. Keep them updated with your latest offerings and special campaigns. Find out which social media channels—Facebook, YouTube, Pinterest, Instagram to name a few—your customers use most, and engage with them on a regular basis.

Here is a great article from the Small Business Administration titled “7 Tips for Starting a Successful Customer Loyalty Program.”.

A number of questions need to be answered before starting a program. Points vs. discounts. Tiered vs. untiered. Apps vs. punch cards vs. phone numbers.

The bottom line is that it’s 6-7 times more expensive to go out and get new customers than to keep the customers you already have, so you should try everything to keep them coming back. A rewards or loyalty program might be a good place to start.

Does your company have a loyalty or rewards program? Does it help the bottom line? I would enjoy getting your comments below.

Paul Rutter is a customer loyalty, repeat business and customer service expert, a keynote speaker, corporate trainer and business author. He has had the unique opportunity to live with his customers and co-workers for months at a time traveling the world, and shares his experiences with land based businesses. For more information on More Than Perfect® Service, contact Paul at Paul@PaulRutterSpeaks.com, follow him on Twitter on @RealPaulRutter or visit him on Facebook/PaulRutterSpeaks.

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