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Keep customers coming back

Tuesday, October 07, 2008   By Mike Reddy


Customer loyalty programmes work big time for big companies but SME owners are often deterred from developing one because of worries about how much it would cost or how difficult it would be to organise and manage. As a matter of fact, the very same principles that keep customers coming back to big companies can be utilised to develop an SME scale loyalty programme without a lot of cost and drama.

Make customers feel like 'members'

Creating a 'club' that provides special incentives to members is one of the best ways to retain customers. This approach works because it is based on the primal human need to 'belong' to something - especially where belonging also makes us feel we are being treated as special.

Who gets to be a member?

A customer loyalty programme based on membership should convey a feeling of privilege for those selected so it can't be open to all and sundry. Customers may qualify for membership either by purchasing their entrée or by dint of their past support and loyalty.

General Nutrition Centres, a specialty retailer of vitamins and supplements, offers a Gold Card membership programme that provides discounts on products, personalised mailings and email on health related topics, product news and exclusive offers. GNC found that they could even use their programme to actively iron out lows in their sales pattern by offering a special discount on sales made on Tuesday, traditionally their slowest sales day.

Only your imagination limits the opportunities for coming up with a bundle of services around your basic product offering that some segment of your customers would find appealing - a dry cleaning business could offer a discount on cleaning, free alterations and a pickup and delivery service; a book shop could offer discounts on items purchased, a magazine of latest releases and reviews, invitations to catered book launches and author talks.

Reward customers for purchasing from you

Reward based programmes are among the most common of loyalty schemes - think frequent flyer points and coffee cards.

They provide gifts and perks that are earned according to the amount of business a customer does with you. Providing a free reward after multiple purchases is an effective enticement to keep them coming back.

Usually, all that is required to manage the programme is a card on which each purchase is registered. After a certain number of purchases, or after making purchases that add up to a certain value have been made, the customer receives their reward - after 6 cups of coffee, one free; after 10 CDs, a free CD; after 9 car washes, the 10th for free.

The reward doesn't have to be related to what you sell.

A clothing store could reward customers who purchase above a certain dollar value of their lines with a couple of movie tickets; customers who have earned enough points can go to an online store and choose from a variety of products there.

Let customers feel good about themselves

Many customers love the idea that while purchasing something for themselves they are also doing something for someone else. Letting customers know that part of what they spend in your store helps out a good cause, whether you choose to sponsor an internationally recognised charity or the local kids' football team, will appeal to some segment of your customers. They'll be drawn back through their sense of charity or community spirit to make their contribution to the good work.

A customer loyalty programme reduces customer defection and may even attract new customers once word gets around about the benefits it provides. Keep the scheme simple. It shouldn't be too hard for customers to understand how it works or to earn their reward. Put the real thinking into just what sort of reward would be encouraging to your customers - knowing what is most important to them is the secret to making a customer loyalty programme successful. Small businesses are actually in a great position to implement loyalty programmes because they can find out fairly easily what interests, motivates or inspires their customers.

Mike Reddy is a Chartered Accountant, business coach and advisor helping businesses in Sydney, Melbourne, Brisbane and Gold Coast to easily increase their profits and cash flow. He is currently President of the North Sydney Chamber of Commerce, a Regional Councillor for Sydney North East and a member of the Institute of Chartered Accountants Sydney leadership team. As well as advising businesses, Mike presents business development seminars and webinars and is regularly contacted by the media to comment on small business matters. You can connect with him on Facebook, Twitter and Google+.