How to set up a customer loyalty program to increase revenues

What is a customer loyalty program?

A customer loyalty program, simply, is a system you set up that rewards your loyal customers for their faithfulness in choosing you for your services or product. It's a win-win situation, i.e. you win and your customers win. You both come out of the customer loyalty program better off than you were before. You've increased your revenues, or profits, and your customers have saved money or received special attention (or whatever) for playing their crucial role in this.

Give me some examples of customer loyalty programs.

OK, let's look at a few examples of customer loyalty programs. We'll just take some random examples, some simple examples, which apply to any kind of business. Let's say we're in the-massage business. We provide excellent massages to people sorely in need of excellent massages. Foot massages, back massages, and so on, to ease the suffering of People Everywhere. Now, what would a customer loyalty program look like in this particular context? Easy. You could say, "Two free massages of choice for every new customer you bring in." That is, every time one of your current customers brings in a friend, and that friend, say, stays with your company for a month (the equivalent of four massages), your current customer gets half a month's worth of massages free of charge. There's a simple example of a customer loyalty program right there. Or let's say-you're a movie rental place. We've all seen the extraordinary lengths that movie rental places have gone to set up customer loyalty programs lately. "Rent 5 movies from us, get one free. Sign up for a year-long movie rental package, and get a free popcorn with each new release. Rent ten new releases and have all your old fines wiped off our records." And so on. These are all examples of customer loyalty programs.

How do customer loyalty programs increase revenues?

Customer loyalty programs increase revenues by (a) increasing the amount of business you do with your current customers and (b) bringing in a horde of new customers. Everybody wins. Jack gets his old fines erased and watches ten new releases in the process. You erase Jack's old fines (which you were never going to see get paid anyway) and receive payment from Jack for ten new releases.

What's the best way of setting up a customer loyalty program to increase revenues?

Well, there are lots of "best" ways, depending, of course, on what business you're in-but the best starting approach is always a simple approach. First, you might want to ask your current customers what sort of loyalty program would really appeal to them. If you'd rather skip the time and expense of such a move, just assume that saving money is what really appeals to your customers. Then, sit down with your marketing team and come up with a few simple, fun ideas for customer loyalty programs. Decide with your marketing team which of your ideas can be immediately and relatively cheaply implemented. We say "cheaply" here because we're still in the learning stage. We're still trying to determine the best approach or approaches from a number of possible approaches.

What other advice can you give me about setting up customer loyalty programs to increase revenues?

The best advice we can give is-stick with it. If you promise something, be prepared to go the whole way and fulfill your promise word for word. That means really thinking through the process before you announce it. Only promise what you can afford to promise, nothing more. Even a small promise will generate surprising responses. Start small, and move from there, and you've added yet another crucial part to your marketing whole.