Customer Loyalty Programs – Are They Worth It?

Have you ever returned to a store of any kind, such as an apparel boutique, nail salon, sandwich shop, or video rental store simply because they have a loyalty program that you participate in? I personally can tell you that I have a favorite nail salon that not only gives me great no-chip manicures, but after ten appointments I get one free. Or, in my eyes, I save $45 and still get a great manicure. There is also a boutique in my neighborhood that offers 40% off any regular priced item under $100 after five regular purchases. Pretty great, huh? If that isn’t enough of a reason to at least look there when I am in the mood for a new special something, I don’t know what is.

Loyalty programs are a great marketing tool to help retain business and increase sales. When customers are given options as to where to buy 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 what you can offer them through your own personal loyalty programs can make up for this.

Advantages of Loyalty Programs

Customers have choices in every action they take, therefore it helps to give them a reason to want to make you their choice as to where to make a purchase. Loyalty programs do just that by creating a relationship with customers that allow them to feel connected, and in some sense obligated, to purchase from you. For many customers, this will simply be because they will hopefully save some money. For other customers, they will enjoy the personal connection and customer service offered through your loyalty program. The reward 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 to help make your customers return to your store to shop.

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

Loyalty Program Examples

1. Purchase ten pairs of shoes and get your next pair on us! Value equal to $100 or less.

2. Save 50% off your next purchase of $200 or less after 5 purchases.

3. Gift certificate for local restaurant on all purchases over $250.

4. Refer a friend and your next manicure (up to $20 value)  is on us! Make sure your friend tells us you referred her.

5. Receive $10 towards store credit for every $100 spent. Store credit must be spent in store only.

Things to Consider

1. 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.

2. Communicate with local businesses to see if they may 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.

3. If you want to include time restraints on your program, be clear about this upfront with your customers through your loyalty program marketing.

When planning your loyalty program, consider all aspects that you want to communicate with your customer, as well as make sure you understand why you want to offer this program so that you can best communicate this with your customer. Hopefully the return will bring you repeat business, increased sales, and loyal customers.

If you have any comments or questions about loyalty programs, please contact me at nicole@retailminded.com.