Customer Loyalty Programs
- What are they?
- How do they work?
- Creating one to fit your unique customer
Part one of three:
What are Customer Loyalty Programs?
A customer loyalty program is designed to attract – and keep – your ideal customer. The customer who loves what you offer and wants to share it with their friends and family. One who visits your business on a regular basis and tells everyone else how great it is.
Here’s what they do:
- Fill a desire
- Give more value than cost
- Use the powerful marketing tools of reciprocity and social proof
- Create a sense of ‘belonging’ for your customer – a ‘tribe’ of special members
A customer’s desire to buy from your business again and again – and even better, introduce others to your business is loyalty. It comes from being made to feel special, the sense that they get more than they receive, and that they are appreciated.
Loyal customers can be the best form of marketing for your business
Let’s talk about what they do:
Filling a desire
Know your ideal customer. What do they want? Give them what they desire.
Example: We created a Tequila Club for a restaurant and Tequila bar. It quickly became apparent that these members wanted only high-end Tequila and they wanted to be served in a friendly but elegant place. They wanted to meet other aficionados who had similar taste. They also wanted value.
What happened? We were hoping for 100 members. We got 380 and it’s still growing. Why? We took the time to understand the psychographics of this group (see blog on ‘why psychographics matter’) and gave them what they wanted. The results were magic, even beyond our dreams. They made friends with others in the club. They attend events and all of them stay for dinner and more drinks afterward, bringing money to the restaurant. They regularly bring friends and family to dine. We put this restaurant at the top of their list for sophisticated fun, made them feel important, and as a consequence it’s the place that comes to mind every time they think of going out to eat.
Give more value than cost
Your goal is to create long-term profit by encouraging customers to be loyal to your business. This requires you to cultivate a relationship with them, where they always feel they receive more value than they pay for.
Giving them a really great value creates the desire for ‘reciprocity’, one of the marketing tools of influence. (marketing tools of influence).
In short, when you do something nice for someone else without expecting anything in return, it’s human nature to want to reciprocate.
Put the powerful marketing tools to work for you
We just discussed reciprocity. Another powerful tool you’ll find in many loyalty programs is ‘social proof’. Most people don’t want to be the first to do anything. Whether it’s commenting on your Facebook post or dancing in public, few of us wants to be the lone wolf. Gather a few people together and let them begin to dance, however, and inevitably others join in. Humans are tribal.
A good loyalty program creates a great experience for your customers – and as soon as they know others are participating and enjoying themselves, new customers want to be a part of the action.
Create a ‘tribe’, or sense of belonging
A loyalty program is more powerful if it makes your customer feel they are part of a special group. They instantly identify with others in that group, and you have the ability to make them feel important.
Of course, they are important. They are among your most important sources of marketing. Get to know them by name. Graciously accommodate their requests. Always go the extra mile for them. Give your loyalty program members the advantage of being the first to hear about events or new products. Keep them engaged by staying in contact with them on a regular basis (but never, ever spam them with a bombardment of emails – once a month is usually plenty). Make them feel they are part of your business – insiders privy to knowledge and rewards not available to others.
Next article: How do customer loyalty programs work? We’ll give you some real-life examples of programs that have created success for business owners and secrets to making them work.
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