Loyalty Programs - Do they work?
- Lisa Dubino
- Apr 6, 2015
- 4 min read
Did you know that it costs a business about five to ten times more to acquire a new customer than it does to sell to an existing one? (Inc.) So how do you keep your customers loyal to your brand? Loyalty cards are at an all time high. In a survey of 10,000 consumers, Bond Brand Loyalty found that one third said they would not be loyal to a brand were it not for a loyalty program. In addition, the study found that the average customer in 2015 is enrolled in 13 programs, compared to 10 in 2014. I took a look at what local businesses are doing to retain their customers and found a variety of approaches to keeping my business. Going “old school,” Kringle’s Pizza in Glen uses a paper and pen “program” at their cash register. You give your name, the cashier pulls out the book and marks down your purchase. No plastic, keeps it simple, and it’s quick and easy. Just hope no one spills a drink on the notebook. A more modern approach can be found at Black Cap Grille. New customers are signed up, and if you forgot your card you can just give your name to the server and the points will be recorded. I have a loyalty card at Black Cap and I love getting my $50 gift card in the mail when I hit my 500 points. I also appreciate the $15 off email that comes twice a year. This is where giving and collecting names and addresses pays off for the business and the customer. Back Cap penetrates its existing customer base while still collecting new names. All for the cost of a plastic card. The one I understand the least and keep waiting for the payoff is Staples. I show my card with every purchase but have yet to get anything. Is that because I’m supposed to visit their site to see what I can claim? That’s not going to happen. And I probably wouldn’t download the app either, if they have one. I want a discount taken at the register. I’m not a coupon person. Unless you’re sending me a gift card in the mail, don’t bother. My favorite program is Starbucks. I add money to the app on my phone and pay with my card via Passport. About every 7 coffees I get a free one. I feel like I’m high tech heaven when I go through the drive through window, show my phone, and leave with my free latte. And the email reminder that it’s coming up in a great incentive to get me there. Here are some ways to put your program to use:
Point system: This is the most common and works best for businesses that encourage frequent, short term purchases. Black Cap Grille uses a point system.
Tier system: This is works well for businesses that have a longer time between purchases, with higher price points and deeper commitment. Progressive Autoworks in Glen uses a tier system. You earn basics points with the basics like oil changes and inspections, and then the points increase with items such as brake and exhaust repair.
Charge an upfront fee: Sea Dogs Brewery has a mug club and for $50 the first year you receive a membership card, mug, t-shirt, and a complimentary lunch on your birthday. And with every purchase your earn points. The renewal is $40 for the next year.
Non-monetary programs where you donate to a favorite charity when a customer swipes a card.
Make a game out of it, such as the customer uses her card three times and on the fourth purchase gets to pick a card and tries to win one of value.
Active Gift Card: Partner with another business as a referral. For example, if you’re a massage therapist you could have the local inns and hotels hand out your card with $10 off to guests. There’s value on the card but instead of having to earn it, the card is simply handed out to new customers by other customers, friends, businesses, and whoever is willing to spread the word, such as your merchant service provider.
There are many more loyalty card programs in the region with a variety of approaches. Some local businesses even have their own apps. It’s hard to say how soon everyone will be able to get their loyalty program out of a wallet and on Apple’s Passbook (for iOS) and Google Wallet (for Android and iOS). But for now, at least you know if you left your card at home chances are your server, cashier, or mechanic recognizes you and will give you the points or discount you’ve earned. And that email address you gave them when you signed up? They need somewhere to send the reward notice!
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