J.D. Associates Retail POS Solutions Blog

Do Customer Loyalty Programs Really Work? Part 2

 Twitter |  Facebook |   Google Buzz |  digg it |   delicious |   StumbleUpon |   LinkedIn |  reddit 

To read Part I (1-3) of this blog article go to: http://blog.jdapos.com and scroll down.

4.   Is it easy for your best customers to make use of your loyalty program?  Grocery stores were one of the first retail vertical markets to offer customer loyalty cards.  The most common rewards in a grocery store are immediate discounts on selected items and “bounce-back” coupons good for discounts on future purchases.  When a major grocery store chain in the northeastern United States decided to offer a loyalty program, they issued keychain loyalty cards to all customers.  Well, God forbid that you should drive a different car one day and take the keychain that didn’t have the card because you were refused the loyalty discount.  This infuriated most customers and finally the store stopped requiring the physical presence of the card.  Customer loyalty is supposed to be a reward not a punishment. 

5.  Do you reinforce the value of being a rewards card holder?  Every time I make a purchase, I should be reminded of the benefits of being a loyal customer.  If it's an immediate savings, the sales associate should let me know how much I saved even if it's printed on the receipt.  If the reward is in the form of bonus points that are going to result in a future gift or discount, the sales associate should tell me how many more points I need to reach my goal.  If I’m close to my goal, I may even make another purchase on the spot just to reach my reward.

6.  Do you keep the customer loyalty program fresh and meaningful?  Many stores begin a customer loyalty program with an enthusiastic blitz.  Staff and customers get excited and sign up customers by the droves.  Often, prizes or bonuses are given to the staff member who signs up the greatest number of customers.  As often, after the initial blitz is over and the prizes are won, customer loyalty programs languish and are put on the back burner to die a slow death.  To be successful, you need to look at customer loyalty programs as living, breathing organisms that need regular replenishment and stimulation.  Periodic events for members, mail or emails to alert members about new merchandise or special “member-only” sales, signage throughout the store that makes it evident of the benefits or being part of the program are all part of keeping the programs alive and profitable.  The staff needs to be provided with regular and meaningful incentives to recruit new members and keep them fully committed to the program.

While software add-ons for loyalty programs are great tools that will help you track long-term customer value, those tools will only be as successful as the additional on-going efforts that keeps these programs meaningful. Loyalty is something that cannot be taken for granted but must be earned every day. Retail statistics commonly agree that it costs 4-6 times more to attract a new customer than it does to retain an exisiting customer. Keeping this statistic in mind certainly seems to justify the expense and work that is put into a well thought out and dynamic strategy designed to increase and maintain customer loyalty.

If you'd like to find out about our Customer Loyalty Programs written for Retail Pro, then click on Customer Loyalty for Retail Pro.