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SmartSales: Loyal Following:
Reward Existing Customers to Grow Your Business
By Patsy Beckman, smartcompanymag.com
Do you know individuals who work feverishly to collect points, saving up for a free vacation or 20-percent discount on their Thanksgiving grocery bill? Experts see rewards as absolutely critical for businesses to build strong relationships with customers — and retain them. That’s why many businesses toss aside the mass-market approach for a well-focused customer loyalty marketing program that appeals to their best clients. Membership in U.S. loyalty rewards programs has reached 1.8 billion, according to the newly released 2009 Colloquy Loyalty Census. “Any business that does not have some type of customer program in place is missing out on revenue,” says Chuck Boteler, owner of Sudden Values of Central Maryland. “Businesses must keep in contact with customers for them to continue to use their services.”
Loyalty marketing initiatives like frequent flier miles position you to capture the 20 percent of the customer base that drives 80 percent of the profits. Such programs “build sales volume by motivating the individual to increase the frequency and size of purchases,” says Pat McGraw, a veteran marketing executive and author of Marketing Optimization. Loyalty marketing aims to earn 100 percent of customers’ purchases within a specific timeframe. This strategy is especially important during a financial downturn, when potential clients are hesitant to make changes. “A business must turn to its existing customers in order to protect and grow,” says McGraw. “In order for the company to become profitable, the new customer must become a repeat customer.”
Save Money. Targeted at a specific customer group, loyalty marketing takes up 10 percent of an overall marketing budget and requires little overhead. “It’s one of the most efficient activities a business can undertake to drive incremental revenue at a cost substantially less than repeated traditional ‘mass’ marketing,” says Boteler. “Since it typically takes a business several sales before the cost to acquire a new customer is recouped, it is critical to retain customers and motivate them to purchase again and again,” adds McGraw.
Establish Enticing Rewards. Leverage the knowledge you’ve gleaned about your customers’ needs to offer rewards and incentives that appeal to them specifically, truly motivating these clients to continue to do business with you. Leverage Relationships. Boteler uses the strong relationships that he has built through his business to promote permission-based marketing — a more personalized direct-marketing tool that keeps customers feeling like they are part of the entire process. Through e-mail, merchants can send out information to strengthen their bonds with customers. “My clients like using permission-based e-mail marketing and are really receptive,” he says.