Your company is well established, you have a good product mix with good sales but your products are not totally unique. There was always some local competition but now the internet is making the competitive pool so much larger. How do you keep your customers? It might be time to develop a comprehensive loyalty marketing program.

What is loyalty marketing? Well, the most common customer loyalty concept is frequent flyer or frequent stay programs or credit card points and cash back offers. Those programs are designed to gain and keep your loyalty.

Loyal Customers Spend More

Reward Programs

Reward Cards are Popular Customer Loyalty Concept

I admit I am a member of an airline loyalty program and I always try to book that airline because of the perks I get – better seats, free luggage check, express TSA lines. I also use certain credit cards for the same reason – I get points and cash back! Why go somewhere else if I don’t get those extras? I also shop at certain stores because I automatically get discounts or cash back as I spend.

That’s a very basic definition of loyalty marketing. It’s their business strategy to focus on retaining existing customers by offering incentives for their continued business. Of course, some research indicates that the more loyal your customers the more likely they are to refer other customers – so the strategy not only succeeds in retaining current customers but the potential for growing your customer base as well.

My neighborhood has a loyalty program. You sign up for a small annual fee and you get discounts at most of the local businesses just by showing the card (you can only join if you prove you live in our zip code). It could be a free appetizer at a restaurant or a buy one get one free drink at a local pub and a discount at one of the many retailers. The aim of course is to keep us spending our money locally. It was developed by the downtown business association and has been quite successful for more than 10 years.

You don’t have to be a large corporation or a business association to have a loyalty program. I went to a local car wash last week and as I paid for the wash they handed me a little card (the size of a business card) with 5 squares on it (and their logo and location of course) and after 5 washes my sixth one is free. Now, to be perfectly honest, it’s not my regular car wash – but now I will go back! Program successful. They now have a new customer and instantly a loyal one!

According to a recent FiveStars Customer Loyalty Data Study, loyal customers have a greater lifetime value, spending 10 times more than a new (non-loyal) customer. To me that’s an impressive statistic. Yes, getting new customers is important for your business (thus feeding your loyalty program) but maintaining them is the lifeblood of your business. You want to make sure that the loyalty program overall will increase the profitability of your customers.

Of the programs I participate, some of the elements that make them successful include:

  • Special Treatment
  • Recognition as a loyal customer
  • Surprise rewards
  • Perceived value

When building your program, remember you are developing a partner for your business. So, think about what you could offer those elite customers that would make them feel recognized and appreciated for their loyalty. Special events, special shopping hours, additional discounts, early sales notifications and admittance, gift with purchase or upgrades are just a few popular choices to consider.

Danette Gossett

Danette brings more than 30 years of experience developing advertising campaigns, direct marketing programs and sales promotions to her clients. Prior to starting her companies, she worked for New York advertising agencies including Saatchi & Saatchi & Lowe Marschalk.

Her corporate marketing experience included National Advertising Director for Avis Rent a Car Systems, Inc., and Director of Marketing Services for Royal Caribbean Cruise Line. Read More

Latest posts by Danette Gossett (see all)