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CHRIS GRIFFITHS

Build loyalty, and business, with a reward program for customers Add to ...

I’m a bit of a reward points junkie. All things being equal, I will go out of my way to shop at a store or with a vendor where my business is being tracked and I get something in return, such as points, a discount or a free gift. I am sure I am not alone.

Yet, while many admit to enjoying loyalty programs as consumers, how many of us offer them, as businesses, to our customers? Not enough.

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Rewarding customers for their loyalty doesn’t need to be an expensive endeavour. You don’t need an Aeroplan or an Air Miles program to attract customers. You can build your own, simple program as quickly as in the next 48 hours and start to reap the benefits immediately.

Start by talking with your team about what types of transactions are best suited for a loyalty program. Look for those that are repeatable and contribute to recurring sales.

A coffee shop, for instance, could offer a “buy 10, get one free” program. An auto repair shop could reward oil changes. A music store could promote guitar strings.

These are all things that wear out or get consumed quickly. They are also things that are easy for a consumer to get elsewhere, so you are creating a loyalty program to remove the risk of losing a customer to a competitor. For this reason, I would not focus a loyalty program on any product for which you have exclusivity or an obvious niche. You’re getting loyalty from your customers already on that fact alone.

Choose something that has a fairly constant selling price, so it is not too difficult to calculate the cost of the program. For example, a buy 10, get one free program will cost you the equivalent of 10 per cent on all 10 transactions – but at least you’ll be guaranteed 10 transactions before you have to give anything up, so the cash flow of the program works in your favour.

Executing a program can be as easy as printing up a business card with 10 squares that you stamp, hole-punch, sign or sticker every time a customer makes a purchase. Your card and method of tracking needs to be distinctive enough to discourage counterfeiting.

Better yet, if you have a single location, offer to keep the card on your premises on behalf of the customer. They will love you for it. They won’t have to add another card to their bulging purse or wallet, nor worry about forgetting the card at home. On top of that, you can keep the cards secure (file them in a simple index box) and limit counterfeiting risks.

Alternatively, if you have a computerized sales register or accounting system, you can offer a loyalty program based on the total volume of business. This is where you can reward one-time purchases or a larger variety of products. If you can track a customer’s sale’s history, you can offer, for example, a 10-per-cent discount if they buy more than $300 between now and Dec. 31.

For a wholesale or distribution business, a program could offer a discount to customers who expand their business by a certain percentage over the previous year. A pitch such as “Grow your purchases of ACME brand plumbing supplies by 30 per cent and get a free iPad or 10 per cent rebate” could work. This might be something you could co-op (cost share) with the supplier of the brand in question.

Create a VIP card that regular customers can hand to their friends offering a discount based on their friendship and your existing customer’s loyalty. That not only makes everyone feel good but can create new business for you.

The bottom line: Keep it simple. Put yourself in your customer’s shoes to figure out what behaviour you want to reward and how best to do it.

One thing is for sure: Customers will respond and you can reap your own rewards – in the form of profit – immediately.

Chris Griffiths is the Toronto-based director of fine tune consulting, a boutique management consulting practice. Over the past 20 years, he has started or acquired and exited seven businesses.

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