It has long been said that it is much more cost-effective to retain a customer than it is to attract a new one. That’s why it is so important to offer quality customer service and ensure that each and every customer walks away fully satisfied with his or her experience with your company. But how do get these people to come back and buy from you again?
There’s a reason why so many stores take advantage of loyalty-based programs these days, because customers are much more likely to return to a store where they gain additional benefits over other stores where such benefits exist. For example, if you have a Safeway card, you’re much more likely to return to Safeway to buy groceries than you are to go to Save-On-Foods or IGA. The same can be said about the numerous reward programs offered by gas stations and other service-based industries.
In a nutshell, there are at least three ways that you can organize your company’s loyalty program. First, you can offer a “member’s price” on your products and services. Going back to the example of Safeway, you’ll find that many of the items in the store have a “club price” that is substantially lower than the regular price. Second, you can have a rewards program where members collect points, redeeming them for free gifts and other benefits in the future. Third, you can offer special benefits for members who return to your store. For instance, shoppers who use Starbucks’ gift cards can get free Wi-Fi, free refills on brewed coffee, and free flavour shots.
The first and third methods are likely the easiest to implement, because you only need to know whether or not a person is a member. A very simple database can track that. The section option, a rewards program, can be a little more costly on the administration side, because you need to track the number of “points” that a member has accumulated to date. You also need to organize a catalog from which they can order.
If your business is starting to feel the economic crunch, consider implementing a loyalty program that will keep customers coming back to you rather than “the other guy.”
Shane
November 26, 2008 11:43 am
You are correct that it is much more cost effective to retain a current customer than to court a new one. I, however, disagree with the effectiveness of points based customer rewards programs. I personally shop at a store for 1 of 3 reasons:
1. The service is exceptional and the staff make my business seem valuable
2. The price is lower and the store is clear about the sacrifices they make to achieve this. i.e. Costco
3. The store is more conveniently located, and possibly has better hours than a competitor
I find points based rewards systems are too ubiquitous and the rewards, too small to truly sway my buying habits. The only points cards I carry are for stores that require them to get lower prices, and even then only for stores that I am shopping at because they satisfy one of the three reasons listed above.
Thats my $.02