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Using Loyalty Cards to Grow Your Business

Jul 17, 2008
Small businesses are facing a challenge in today's economy. As businesses tighten the purse strings on budgets, critical items like advertising, promos, direct mailing and trade shows are getting cut back. Missing these initiatives can take their toll in not only driving new customers but increasing activity from current ones. The problem becomes how to effectively tell clients and customers that they are wanted and needed. One solution to this that may have gone under the radar is the power of loyalty card marketing.

The concept of adding a gift card to your business has been well-embraced, as gift cards were the most asked-for gift item of the past holiday season. What many small businesses may not be familiar with, however, is the strong results you can see with a loyalty campaign. It may cost up to 10 times the expense to add a new customer than it does to retain a current one. With that in mind, more effort should be focused on keeping your current customers returning. Enter loyalty card marketing.

Loyalty card programs have simple marketing concepts at their core: providing incentive and motivation to your existing customer base to do more business and to provide them with something of added value. An ideally designed loyalty card program will not only give your customers that extra value, but it will also provide you with something of value -- insight into the buying habits and purchase patterns of your best customers.

One of the most appealing features of a loyalty marketing campaign is its flexibility. Programs can be customized to fit the economics of the business offering it. For example, a furniture dealer, who may deal with larger-ticket purchases and higher margins, may decide to offer a "Mystery Shopper" campaign. With this program, cards are distributed (either through direct mail or other store events) with varying discount values. A consumer's card may include a discount from $10 to $1,000 off their furniture purchase. The card must be presented at the place of business in order for the recipient to determine their card's value.

And instead of making the $20 range the most frequently delivered prize, the furniture seller makes $30 the most-rewarded level. This allows consumers the feeling of winning something of increased value. The program succeeds because consumers won something of value and earned a discount, and the furniture dealer pushed sales and had complete control of the amount and type of discount their clients received.

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.

It's also important to keep your program simple. By making the above program one point for one dollar spent, the restaurant is able to keep the message clear to both consumers and employees. The simpler the design, the easier it is for your employees to explain and promote.

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.
About the Author
Al Duggan specializes in loyalty cards and the VP of Business Development for Valutec Card Solutions, the nation's largest provider of gift card programs to small merchants. To get additional information, please check out their website today.
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