Rewarding Customer Loyalty

The theory of customer loyalty is quite plain: a business that retains its customers for longer usually makes more money from them at lower cost than one that is constantly paying to acquire new customers. Make a good job of securing a new customer at the age of 25 then your business could potentially have them for life.

Even winning over a 40 year old could possibly give you more than 30 years custom with them. Actually doing that – the practice of customer loyalty – is not so straightforward. Creating loyal customers depends fundamentally on following good and sound business and marketing practices right across the business all the time. It's a sad truth of business that customers are hard to win but easy to lose.

What Are Loyalty Schemes?
Loyalty schemes are offered by businesses to entice consumers to return to their shop. The providers hope that by giving their customers rewards for shopping with them they are more likely to return. Whenever you make a purchase you are given points that can be traded in for products.

Do You Have A Loyalty Card?

Loyalty cards are a way for customers to earn a little back by showing some purchasing loyalty to a certain shop. Businesses do of course benefit as well, especially when it comes to keeping track of their customers with loyalty cards.

Loyalty cards are designed to help shops gain an edge on their competitors. They are designed to bring customers back to the one shop and in the case of the more sophisticated card schemes, to track the spending habits of customers using the latest analysis methods.

Loyalty Card, Frequent Customer Card or Discount Card

Many of the so-called loyalty programmes in operation today are not really loyalty programmes at all. Perhaps 'frequent customer programme' is a more accurate term. To be loyal to a business is one thing, but to use it frequently is another. Clearly, if another choice becomes available, then the distinction becomes critical.

The ideal loyalty programme would be one in which already loyal and potentially loyal customers benefited, but other customers didn't. How many times do you say at Christmas it would be great to see all these customers during the year?

A reward might be a mere discount but other rewards can be complementary to the meat you are selling – e.g. casserole dishes, dinner plates etc.

Most retailers accept that they need to know more about their customers, and that the knowledge should be centrally recorded so that it is available to employees when they need it. Loyalty programmes should enable that information to be recorded and so are an essential part of retail. The retailer judges the usefulness of a loyalty programme by how it can help run the shop more efficiently and more profitably.

Keeping it simple

Not everyone card have a system that works so efficiently as a Morrisons Miles Card, Tesco Clubcard or Sainsburys / Debenhams Nectar Card. The Glenearn car wash in Perth has a two sided paper card, the size of a credit card, that is signed or stamped in a box on every visit and after seven visits you get a free car wash. The Mustard Seed / Kitchen Restaurant in Inverness has a similar card where you earn free coffee, wine etc depending on the number of visits. Cafe Nero and Marks and Spencers run similar schemes in their coffee shops.

Years ago the Meat and Livestock Commission supplied butchers with a Premier Card. This worked in the same way as the rewards schemes above but logged the customers name and address. Nowadays you would log emails and mobile numbers as well perhaps. The card got stamped if you spent a sum – £6 possibly – and when the card was full a gift was redeemable.

What this created was firstly a database, a league table showing your best spenders and also rewards for more loyal customers. It came as a surprise to some that the best customers were not always the ones you'd recognise and not the ones that you spent the most time with. The regular customer who comes in every morning for half a pound of liver for her cat was getting much more attention that the Thursday afternoon shopper who slipped in and spent a small fortune.

When the best customers are established then you can find out who they are and make a point of looking after them. At least you quickly get to know who they are!

The Premier Card can be easily created at your local printer. Leave a place for name and address and a member number. Create a sheet to log the details and off you go, even if you don't want the hassle of keeping that record initially you will receive the information when the redeemed cards are handed in.