Customer loyalty is one of the most important, if not the most important asset of any retail organisation. It is an accepted fact of marketing that it costs more to make a sale to a new customer than it does to make a repeat sale to existing customers.
Hand in hand with this is another accepted fact: the more a customer is contacted, the more likely they are to buy. The more they buy, the more likely they are to buy in the future, especially if the experience is a good one.
Building these two aspects of marketing into a loyalty scheme is a good way to reward valued customers and generate repeat sales, often referred to as customer loyalty marketing. This article concentrates on two trends – loyalty card schemes and the use of social media in customer loyalty marketing.
Loyalty Card Schemes
Loyalty cards are one of the most common forms of loyalty marketing programs. They can take a variety of different forms:
- a stamp-card from a sandwich shop;
- a points collection card issued across retailers; and
- a simple card file in a small shop.
The general idea behind all of the above is that the customer is rewarded for multiple purchases – either by a 'get one free' offer, collecting points that they can exchange for gifts, or the cumulation of value leading to money off a future purchase.
While retailers find them useful, customers sometimes react negatively to them (How Loyalty Card Schemes Suck You In and Rip You Off by Erica Douglass), as they see them not as rewards, but as an incentive to shop more often, and spend more per visit.
Customer Loyalty Marketing
To mitigate this kind of reaction, it might be useful for retailers to consider rolling out a social media based loyalty scheme. This is a recent trend amongst retailers, as detailed in the report “Customer Loyalty gets most Marketing Dollars in Social Media Study”, from Direct Marketing News.
This extends the idea of the card and club model to use social media to distribute information amongst club members. The retailer benefits from a cheaper, easier, and more direct form of marketing to existing customers. Customers benefit from the ease with which they can access information about their favorite retailers.
There is a place for customer loyalty marketing and loyalty card schemes in retailing; in fact, it will play a big part now and in the future for retail outlets. As one of the comments at the end of the Direct Marketing News study says : “I see Grocery and other consumables dominating Facebook in the year to come.”
Only time will tell how the loyalty programs make the transition, but it is clear that if they do it successfully, a broad repeat customer base can be built for a fraction of the cost that running a traditional loyalty program entails.
Guy Lecky-Thompson - Guy W. Lecky-Thompson is the author of several technical and non-technical books, and writer at large. He has written for Dr. Dobbs ...
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