Website Marketing Club

Using Loyalty Cards to Grow Your Business

Nov 8, 2009 Sales

With the economy tightening the belts of consumers and merchants alike, more and more businesses are reducing expenses on important client and sales driving initiatives like promos, print ads, direct marketing and attending trade shows. Small businesses are finding it increasingly difficult to bring in and maintain active customers. This leaves merchants with a challenge: how to send the message that they want and need customers. One solution that many businesses may have overlooked is loyalty card marketing.

Chances are good that a merchant offers gift cards — they were the most-requested holiday gift in 2007 based on consumer popularity. But many merchants may not fully understand the impact a successful loyalty campaign can generate. Studies show that it can cost up to 10 times as much to gain a new customer as it costs to retain an existing one, so the economics suggest merchants should do everything they can to keep current customers coming back. Loyalty card marketing is designed to do just that.

The goal of loyalty card marketing is a simple one: showing added value to your current customer base and incenting and motivating the less-active customers to return more. A well-designed loyalty program will not only give the customer something of increased value, but it also provides the business with important data that can be used to drive more and more sales. Learning more about the purchase patterns of your most prized customers is valuable insight that you can capitalize on.

A loyalty campaign can be extremely flexible with customization to fit a variety of business economics. A furniture seller, as an example, with big-ticket items and sales could develop a “Mystery Shopper” program. Using this concept, they provide their customers (via an in-store event or through mail) with loyalty cards that contain discounts ranging from $15 to $750 off their next purchase. The value of the card is unknown by the customer until it is brought to the furniture store.

This promotion is successful because consumers consider it a “game” of sorts that can lead to a substantial discount. Merchants like this promotion because it enables them to strictly control the number of cards with a particular discount amount. And here’s a tip: advertise the “range of value” to be, for example, $10 to $1,000, but only create a few $10 cards with $20 being the most popular low-end discount. This way, almost every consumer considers himself or herself a “winner,” achieving something in excess of the lowest-valued discount.

A restaurant may offer its loyalty-card rewards at a level and pace on an entirely different scope by using a “point” system. Every patron can earn a point per every dollar spent in the restaurant. Purchases can be automatically tracked in the program and customers notified whenever they earn a reward level. This information can be printed onto their receipts. As the patron earns his or her free dinner, you develop a stronger bond with this consumer. Loyalty and return visits increase along with the incentive to earn more prizes. This bond becomes increasingly difficult for your competitors to chip away at.

Another tip: keep your program easy to understand for both employees and customers. Make a dollar worth one point so calculations are easier for customers to understand — they’ll use the program more often if it is easy to understand and execute, and your store personnel will find it easier to explain and sell.

Make sure your loyalty program reaches your customers. Good things happen to those who properly promote their campaigns. Give your loyalty program play in your newsletters, emails and on register receipts. Build awareness by using table tents, posters and other in-store and point-of-sale display pieces. Take advantage of those communication vehicles and advertising space you already have established.

To survive and thrive in a challenging economy requires you to look beyond your normal mode of business. These adverse times, however, may give rise to opportunity. Loyalty marketing can prove to be an effective tool with more and more consumers looking for value and savings. Tap into that growing demand by developing a loyalty card program. And if you already have a loyal customer following, give them more reason to stay with you and less reason to go elsewhere.

Al Duggan is an expert in loyalty cards and the VP of Business Development for Valutec Card Solutions, an FIS (NYSE:FIS) company, the country’s biggest provider of gift card programs to small merchants. For more details, please visit their website now.

Tags: business services, card services, customer retention, gift card program, gift cards, giftcard, loyalty cards, loyalty program, merchants, Sales