Is Your Customer Loyalty Program Strategic or An Afterthought?

is-your-customer-loyalty-program-strategic-or-an-afterthoughtI am blogging on behalf of Visa Business and received compensation for my time from Visa for sharing my views in this post, but the views expressed here are solely mine, not Visa’s. Visit http://facebook.com/visasmallbiz to take a look at the reinvented Facebook Page: Well Sourced by Visa Business. The Page serves as a space where small business owners can access educational resources, read success stories from other business owners, engage with peers, and find tips to help businesses run more efficiently. Every month, the Page will introduce a new theme that will focus on a topic important to a small business owner’s success. For additional tips and advice, and information about Visa’s small business solutions, follow @VisaSmallBiz and visit http://visa.com/business.

As an entrepreneur, I dream of a business where money just comes in because clients are purchasing from me over and over and over.

I remember learning about the 80/20 rule in a college business class.  The 80/20 principle states that eighty percent of your business will come from twenty percent of your customers.

Is this the case for your business?

In my case, and in the case of many of my consulting clients, good customer loyalty programs can make or break your business.  In fact, customer loyalty and customer retention should be just as important, if not MORE important than lead generating activities.

My promotional products business, Doodads, has been around for 14 years this August.  In the beginning I did a lot of trial and error to grow my business, but I quickly learned that it was a lot easier to keep an existing customer happy than it is to get a new customer.  In fact, the 80/20 rule works here too.  It takes 80% more work to get a new customer and only 20% to keep that customer that already knows you to purchase again.

My customer loyalty program is designed to keep my existing customers happy.  To this day, over 85% of my business each year comes from repeat customers, a statistic I’m quite proud of.  In the business-to-business space, customer loyalty programs look a little different than in the business-to-consumer space.  Punch cards and bonus points don’t work as well for businesses; however, I do have some suggestions (If you have a business-to-consumer operation, still read these, because they can apply to you as well).

Here are three tips for business-to-business companies to encourage repeat business.

  1. Provide killer customer service. Though this sounds like Business 101, I’m still surprised how few of my consulting clients have an actual plan for providing top notch service to make customers happy.  I learned very early on that people aren’t really buying imprinted pens from me, they are buying ME.  I have A LOT of competitors, including online merchants that are willing to make pennies on an order.  As a result my clients often pay MORE to use me.  Why would they do that?  Because I make working with me easy (and hopefully a little fun, too). In addition, with my marketing background, I try to be a value added resource as they put promotional items into their existing marketing campaigns.  Though you don’t have to have that knowledge to be successful in the business, it’s part of my customer service strategy to help with other marketing tasks as well.  In your business might look a little different.

How can you apply this principle in what you sell or offer?  Whatever you do, make it as personal and direct as possible. In the digital age, it’s really easy to forget that actual conversations and small gestures go a long way.  If you don’t have a customer service philosophy, take some time to define it.  Like so many things, “If you fail to plan, you plan to fail.”

  1. Express gratitude complementary to the dollar amount received.  Handwritten thank you notes are ALWAYS appreciated and should be a bare minimum, but don’t stop there. Do you have clients that give you BIG orders? Thank them with lunch, a gift certificate, a nice gift or something else.  Gratitude can be futuristic currency.  Gratitude makes deposits in the relationship bank account.  You want them to remember you, and you also want to acknowledge that you know that they have other choices, and you’re grateful they picked you.
  2. Don’t be forgotten. Stay “in front” of your client.  I should add “appropriately”.  Some sales reps and business owners can go overboard here, but overboard is better than not doing it enough.  The goal with getting repeat business is not being forgotten.  Keep your clients up to date on new product offerings, promotions or industry information.  Keep in touch in various forms: email, social media and especially phone calls.  Don’t always call for a sale, either.  Where appropriate remember birthdays and key life events.  Follow up on their business goals and see how you can help.  Top of mind awareness is key in having clients purchase from you over and over.

Here are three tips for business-to-consumer companies to encourage repeat business.  In ADDITION to all of the above, consider the following:

  1.  When considering frequent card/punch card program and the like, remember three things:

Is the program easy to understand?

Is the prize at the end worth it and does it encourage repeat business?

Is it attainable?

If there is confusion about how the program works, people won’t participate.  If the discount, free meal, or gift certificate is so low or laughable, then people won’t participate.  If it takes too much to achieve it, people won’t participate.  And note that if you confuse them, insult them with a poor reward or make it impossible to reach or take too long it could actually HURT your business.  People will associate your business with a lame customer loyalty program and even if they like your product, service, store or restaurant, you may actually discourage future business.  Think about the customer loyalty programs that you like and participate in. What makes you like them and participate?  Whose punch cards are in your wallet?  Where do you like to shop for the free stuff? Design your program accordingly AND in alignment with your brand and industry.

Don’t be afraid to give things away for free or provide dollar amount bonuses for future purchases.  Remember that this is part of your marketing and business development plan.  Don’t blow out your budget, but do make it worth the time and effort to return online or in person.  Set your pricing accordingly to account for future freebies or discounts.

  1. In addition to a punch card like system, offer special bonus days/times/coupons for repeat business.  This can be done with bounce back coupons, regular or sporadic customer appreciation days or parties, etc.  They can be given at events, at your location, mailed or emailed.
  2. Participate in social media and provide benefits/discounts/perks for following you. One restaurant I frequent gave me a yummy chocolate chip cookie for liking them on Facebook, right on the spot.

Social media can be a great way to keep top of mind, so encourage your customers online and in your store to like you on Facebook and follow you on Twitter, Instagram and Pinterest, etc.  Share strategically and with a specific plan.  Don’t sell with EVERY tweet and status update.  Share things about your industry and employees.  Link to news on your blog or to third party sites that help you look like a news curator.   Be a hub and use your social media as a resourceful foundation for your brand, not a sales spewer.  Do social media RIGHT and can be a big part of your customer retention and loyalty plan.

I’ve been super impressed with a local clothing boutique called koodeker.  She ROCKS Instagram and her business proves it.  She has a huge following on Instagram and posts pictures of outfits put together, accessories, an item of the day, pictures about $5 shipping anywhere in the US and also gives shout outs and re-grams for customers who Instagram a koodeker outfit or piece.  Customers follow her and Instagram their outfits to get a mention.  Customers love to see the new items and because she’s made shipping so easy and affordable, customers don’t even have to go in the shop to get the latest thing.  That is genius Instagram marketing and customer retention through a social media outlet.

Remember that whether your clients are businesses or individuals, people do business with people and businesses who they know, like and trust.  Examine your company and your customer loyalty program and ask yourself, “Do my customers really know about my products and services?  Do they like what we offer and do we have a wide range of offerings for their needs?  Do they like our company philosophy?  Do they trust us as a company?  Do they know what working with us feels like and do they trust that?”  These can be great questions to ask in your next staff or management meeting.  Your company’s perceptions have a lot to do with repeat business and you don’t want to miss the mark.

I’d love to hear what works (and what doesn’t) in your business.  Let’s share and help each other grow!

Also, take a minute to Save or Pin the infographic below.

Originally Published on StartupPrincess.com on July 22, 2013

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Please note: I reserve the right to delete comments that are offensive or off-topic.

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