We’ve all seen them before. Frequent-buyer programs, frequent-dining coupons, membership cards and points-at-the-pump schemes. In today’s retail world, these programs are part of the loyalty craze; a movement that started at the end of the 19th century with Betty Crocker points and S&H Green Stamps. Today, more than 75 percent of consumers have at least one loyalty card, and the number of people with two or more is estimated to be one-third of the shopping population. Loyalty programs are now a price of doing business. But whether or not they are effective depends on how well they maintain customer data to help retailers make cost-effective marketing decisions.
A loyalty program is a system to reward customers for spending their money at your place of business on a frequent basis. They are designed to tell us how to attract customers, how specific customers react to specific promotions, how you can spot new trends and how to improve store layout, customer service and merchandising based on customer spending behavior. However, most loyalty programs in the market today are virtually the same. Many retailers become inundated with the administration of the points, the rewards, and the discounts. Consequently, customer data, which is the number one benefit of implementing a loyalty program, and also the element that makes your program unique, remains underutilized.
Do you know which of your customers generates the most revenue for you? Do you know when they visit, how often they visit or what they are buying? The most successful loyalty programs allow retailers to analyze, comprehend and devise profitable marketing strategies based on customer spending habits. Capturing and segmenting data from customer purchases will help you tailor your marketing efforts to appeal to a specific group of customers. For example, as a jeweler you may want to send a unique mailer to customers who haven’t shopped in your store in the last twelve months and extend a special offer to entice them to shop again.
Tracking points for the sake of tracking points won’t build customer loyalty and repeat business. That technology is merely an enabler and cannot by itself differentiate you from your competitors. Your program will begin to look like all the rest. What will differentiate you and provide that personalized shopping experience for your customers is using that technology to develop target market segments, reaching precisely the right people with the right
message.
To further differentiate your business, you must not forget the importance of good, old-fashioned customer service and communication. When customers come across your membership card in their wallet, you want them to remember something special about you. From a simple greeting when customers walk into your store to sending a postcard wishing them a happy birthday, the fundamentals of customer service and staying in touch with your customers are just as important as implementing a rewarding loyalty program. When all of these elements are working effectively, you will maintain happy and satisfied customers while your profits continue to grow.
Interest in loyalty programs continues to strengthen as businesses try to differentiate themselves from competitors. But whether or not loyalty programs are effective depends not on how well they track points but on how well they employ customer purchasing data to help retailers develop personalized, tailored promotions. Loyalty programs that utilize cutting-edge database technology can help you promote repeat business, develop long-term customer relationships, enhance your customers’ experience each and every time they visit, and improve your business’ bottom line performance.