Customer loyalty programs go beyond incenting your clients to return – they tap into your customer’s psychology.

You and probably everyone else you know are part of a customer loyalty program. Just look at your key ring, or in your wallet, and you’ll probably find a bunch of cards for a variety of businesses. If you have a  Miles Credit Card or  Rewards Card from your favorite supermarket, these are also  loyalty programs.

It is estimated that at least 75% of consumers have at least a single loyalty card, and that those with more than two comprise a third of the population. Loyalty programs have been around for decades, and many businesses have some form of simple strategy, if not a more elaborate one.

Why do they work so well? 

These businesses know that when they give their customers a loyalty card, that they are creating a sense of belonging for the customer.  Now they belong, they are special, a VIP.  In today’s word where for far too many of us have lost a sense of community the power of belonging to something is deep.

Don’t be a traitor

If you’re at Bob’s Pet Food, and open your wallet to discover a half-stamped discount card for Purdy’s Pet Supplies, you’re reminded not only of your “investment account” at that business, but that you are part of the Purdy’s “club” or clientele.  So when you go to Bob’s, you feel a bit like a traitor, or at least an outsider.

At the very least, working towards the reward or incentive will be enough to make the customer choose your business over another. They want to get one sandwich or coffee closer to their free item. They want to get to the next category or level of bonus points. They want to have enough funny money to buy something!

Your customer loyalty program is designed with a single purpose: to keep customers coming back to your business.

We all know how tough and expensive  it is to get new customers.  Keeping your present customers and having them buy more and more from you is easier and far less expensive.

While you may fear that a loyalty program is too expensive or complicated, there are a host of really simply strategies that can have just as much impact for a fraction of the financial investment.

With this in mind, you need to make sure that your program is structured around your customer and what they believe is valuable. Otherwise, the reward or incentive won’t be enough to motivate your client to return.

Keep in mind that customer loyalty programs also allow you to track and monitor your customer’s purchasing habits, and even gain further demographic information through a detailed sign-up form. Your loyalty program could serve as a vital component of your ongoing marketing research.

Not for every business

Now customer loyalty programs don’t work for every business – to imply so would be misleading. If you sell high priced items, chances are that customer isn’t going to be coming back to buy from you every month.

In that case, you may be better served by an incentive-based referral strategy to gain more business from your customer’s friends and family network. This will still maximize your customer acquisition investment.

Let me know how you encourage more business from your present customers.