Without customers, you don’t have a business. But it’s difficult and costly to land a customer. So once you have a customer, how do you keep them coming back? That’s where customer retention and loyalty programs come in.
You’re familiar with loyalty programs already — the most obvious example is the airline frequent flier program. But I’m betting you also have a coffeehouse or sandwich shop punch card or frequent buyer discount card from a small store in your wallet. I do.
Remember Rhonda’s Rule: “The best source of future business is a past customer.” Not only are satisfied customers more likely to buy from you again, they’re the ones who generate word-of-mouth marketing and referrals.
Most marketing specialists agree it’s far less expensive to keep a good customer than attract a new one. It’s estimated that it costs from two to 10 times more to acquire a customer than to retain one. So it’s worth your while to spend a bit of time and money figuring out how to keep your current customers loyal to you.
What keeps customers coming back?
The first and most important reason, of course, is the quality of your product or services and the way your company is run. If your sandwiches are lousy or customers have to wait too long at lunchtime, it won’t matter if you have a punch card for your sandwich shop. One of the best ways to cultivate happy, loyal, and long-term customers is to consistently give them an excellent product or service.
But this isn’t enough for every company, and even if you have a terrific product or service, you’ll need to make special efforts to retain customers. This is particularly true for new and very small businesses. So, consider how you might institute a “loyalty program” to keep customers attached to you.
Reward/Loyality Programs
All loyalty programs have basic attributes:
• The customer gets a reward — a discount, freebie, upgrade or special service — for being a regular or big customer.
• There is a way to keep track of the customer’s purchases — you can have a sophisticated computer database, a handwritten ledger or a simple punch card.
• Generally, but not always, the customer gives the company his contact information, which enables the business to keep marketing to and communicating with him.
Some structures of customer loyalty/reward programs:
• A free reward after multiple purchases: Enticing customers to keep coming back to you by offering them something free after they make a certain number of purchases.
• Buy-ahead discounts: A significant discount or freebie for buying multiple products or services in advance, such as getting 12 months’ membership in a gym for the cost of only 10 when you buy the entire year at once.
• Membership/clubs: Discounts or rewards for people who agree to sign up to be a member of your “club” and continue to be associated with you.
• Upgrades/special services: Many customers want special treatment (or better products) because they see themselves as a valued customer.
• Discounts after purchase: Discounts given as a reward after a customer makes a purchase, to both encourage future purchases and to thank customers.
From time to time, evaluate the cost of your loyalty/reward program. Adjust the terms and nature of your program.
But don’t forget: The longer a customer remains with you and continues to buy, the more profitable the relationship.
That’s why it pays to reward customers and keep them loyal to you.
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