Customer loyalty Programs… should you have one?

Have you ever returned to a store (such as an apparel boutique or coffee shop) simply because they have a loyalty program that you participate in? Many people have a favorite coffee/tea joint that is both friendly and serves up caffeine just the way we like – and after ten cups gives away one for free! You can rationalize the first nine drinks because you just saved $4 on the tenth. There are also the hooks when a boutique offers 40% off any regular priced item under $100 after five regular purchases. Pretty great, huh? This is usually enough incentive to get you to at least take a peek when the shopping mood strikes.

Loyalty programs are a great marketing tool for retaining business and increasing sales. When customers are given options as to where and what to buy, their decisions can often be influenced by who will reward them the best for their purchases. As small business owners, you may not be able to give them the same kind of incentives that big box retailers can, but you can offer them your own personal loyalty programs, which might make up for it.

Advantages of Loyalty Programs
Customers have choices in every purchase they make, therefore you want to influence them to shop with you. Loyalty programs do just that by creating a relationship with customers that allows them to feel connected, and in some sense, obligated, to purchase from you. For many customers, this will simply be because they will save some money.  Other customers will enjoy the personal connection and customer service offered through your loyalty program. The rewards of the program itself can also be an incentive. Whatever the reason is, customers respond to stores that give them something in return for their business. Common examples of this are sales and special events. A loyalty program is simply one more thing you should consider implementing to help customers want to return to your store.

The following are few loyalty programs to consider. Please note all specifics, such as percentages off, purchase quantities, and other details are examples only. You will need to customize your own details to cater to your business needs if you should decide to create a loyalty program for your customers.

Loyalty Program Examples

  • Purchase ten pairs of shoes and get your next pair on us! Value equal to $100 or less.
  • Save 50% off your next purchase of $200 or less after 5 purchases.
  • Gift certificate for local restaurant on all purchases over $250.
  • Refer a friend and get a Tivoli scarf on us! (up to $20 value) Make sure your friend tells us you referred her.
  • Receive $10 towards store credit for every $100 spent. Store credit must be spent in store only.
  • Exclusive shopping nights, trunk shows and access to new product first.
  • Help your customers create a holiday wish-list for the ones they love. Santa does not always know what to give, so have your best customers compile a store wish-list.

Things to Consider

  • Be very clear with any specifics you are offering or NOT offering. For example, if you want to put a spending limit on a free service or product, note this in your loyalty program so that there is no confusion with your customers.
  • Communicate with local businesses to see if they want to contribute to your loyalty program. For example, a local restaurant in your neighborhood may be wiling to donate gift certificates to you in exchange for the marketing they will receive by doing this, as well as the possibility of gaining new customers.
  • If you want to include time restraints on your program, be clear about this upfront through your marketing content.
  • When planning your loyalty program, consider all aspects that you want to communicate to your customer.  Make sure you understand why you want to offer this program so that you can best convey its benefits and limitations. The goal is to create repeat business, increased sales, and loyal customers.
  • Love your customers and they will love you back.