Learn About Setting Up A Customer Loyalty Program

Customers are, without doubt, essential for any successful business. Without customers, where would your business be? That’s right, nowhere. What you may or may not know is that the majority of your business’s income will be generated by repeat customers; research has shown that it costs between 2 and 10 times more to gain a new customer than to retain an old customer. For this reason alone it is prudent to try to improve customer loyalty to your firm.

So if improving customer loyalty or creating loyal customers is such a great way to increase sales, how do you go about achieving it? Well, there are a few different routes that you could take, though most companies prefer to implement a customer loyalty program and offer customers a loyalty card. A loyalty card could either be a card that advertises a set discount on certain or all purchases, or it can be used on a points system, giving the customer a discount on certain items when they purchase a defined total value of goods.

It is expected that you are now thinking that there could be great rewards, but also even bigger risks; and that is true, not all loyalty programs work and not all are implemented correctly, but get it right and you could be seeing a huge increase in profits from just a small percentage of customer retention. Be prepared to wait to see the benefits, though, as it is likely that the increase in profits that you are hoping to see will not be prevalent for 18 to 24 months after the introduction date.

Another benefit to customer loyalty programs is that you can gain valuable market research through monitoring the purchasing habits of customers. Most companies will ask customers to fill in a short application form in order to be accepted into the loyalty program, this form will ask for information on names, ages, addresses, employment situations, marital status, average yearly earnings, product preference and buying habits. That information can be extremely useful if used wisely as you will be able to use the information to adapt your marketing techniques towards the demographics to which you already sell to, obviously meaning more effective and cost efficient marketing.

When establishing a customer loyalty scheme, it is important to make sure that the customer can get something out of it. If the customer can not see any benefits to a reward scheme, then they will be less likely to sign up. Also, be prepared for the long haul; a loyalty program can cost as much as 5% of your annual revenue and you will probably not see a return for quite a while, but when it comes, you will be laughing.

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