In today’s economic climate, it is getting increasingly difficult for small businesses to gain and retain valuable customers. Many merchants are cutting back on anything they feel is optional, including critical business initiatives like print advertising, promotions, tradeshow attendance and direct mail. This leaves businesses with a problem: how to effectively communicate to customers that they WANT and NEED them? Loyalty card marketing is one answer that many merchants may not have considered.
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 ten 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.
Loyalty card marketing has simple objectives at its core: to demonstrate additional value to existing customers and to motivate occasional visitors to a business to come back. A loyalty program that is properly crafted will not only provide additional value to the consumer, but it allows the merchant to gain access to valuable data they can use to increase sales and revenues. In essence, the merchant gains visibility into the purchase patterns of their most prized patrons.
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 $1000 of their furniture purchase. The card must presented at the place of business in order for the recipient to determine their card’s value. 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. Here’s a tip: advertise the “range of value” to be, for example, $10 to $1000 but only create a few $10 cards with $20 being the most popular low-end discount. This way, most every consumer considers himself or herself a “winner”, achieving something in excess of the lowest-valued discount.
For restaurants and bars, a very popular loyalty card campaign involves a free or discounted offering for accumulating “points” on every purchase. For example, a restaurant visitor may earn one point for every dollar spent, accumulating points until a reward level is achieved. The program can be set to automatically keep track of a consumers’ purchases and then “notify” that consumer they have reached a reward level by printing the information on their receipt. Once a customer receives a free lunch or haircut or another pair of shoes at half price, they immediately form a bond with your business that competitors will find very difficult to break. 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.
Regardless of the program a merchant chooses to increase their marketing impact, one simple rule always applies – good things happen to businesses that advertise their program. This is especially true when launching a new program or revising an existing one. Take the opportunity to shine light on your new program by placing a notice on cash register/terminal receipts; discuss your program in newsletters, emails and other customer communications. And most importantly, create awareness by placing point-of-sale materials in your place of business. Gift and loyalty cards are often an impulse buy and using customized posters, displays, table tents, and other merchandising tools will impact sales.
It is difficult to survive in such a challenging economic environment but often opportunities can arise from adverse conditions. Loyalty marketing is no exception. Consumers are looking for value anywhere they can find it. If you already have a loyal customer base, you are fortunate. Take it one step further and give those loyal customers another reason to shop elsewhere.
Al Duggan is an expert in gift/ loyalty card marketing and the VP of Business Development for Valutec Card Solutions, LLC, an FIS (NYSE:FIS) company, the country’s largest provider of gift card programs to small merchants. To get additional details, please visit their website today.
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