Maintaining Customer Relationships

with Customer Loyalty Programs

Strong customer relationships are the long-term goal of every small business. Maintaining those relationships requires no small amount of effort and creativity. In recent years, small business owners have turned to customer loyalty programs to help them with this task.

Customer loyalty programs are small incentive-based programs that reward faithful customers with benefits, discounts and "freebies." By rewarding faithfulness, the business generates sales from its existing customer base, which is exponentially less expensive than generating business through a new customer acquisition program.

Although customer loyalty programs come in many different forms, the tried and true programs fall under four different categories.

1. Prepaid discount plans
   Prepaid discount plans offer customers a discount for buying services in advance. An example of this type of program might be a carwash that sells a prepaid card for $25 and throws in a free wash with the purchase. These plans fulfill two important needs for customers: Value and immediacy. Both are critical in laying the groundwork for long-term customer satisfaction.
2. Rewards for reaching a set purchase level
   Other customer loyalty programs involve giving customers a reward in exchange for a track record of purchasing from your business. Often, these types of plans keep track of purchases with a punch card or other tally system that the customer carries with them and exchanges for the reward once the purchasing goal has been reached.

   If you are establishing a purchase level reward plan in your business, there are a couple of things to keep in mind. First, the number of purchases required to receive the reward needs to be reasonable. Most programs require the number of purchases to be in the 10- to 12-item range. Secondly, the reward needs to be something of value — it needs to be either a freebie or a very deep discount. Otherwise, customers will not buy into the program and the program will be a waste of time.

3. Free upgrades
   Another way you can reward customer loyalty is by giving your most valuable customers free upgrades. This is relatively inexpensive and it is a great way to make your customers feel special — a cut above the normal clientele. It also provides an opportunity for you to communicate how much you value their business in very practical and tangible ways.
4. Wildcard promotions
   Wildcard promotions are seemingly random opportunities for your business to reward customer loyalty in unique and creative ways. In fact, there is nothing random about them at all. They are part of an intentional strategy to stir up new business from your existing customer base.

   Wildcard loyalty events run the gamut. They can range from simply mailing faithful customers coupons for freebies to organizing a day-long golf outing for a handful of your most loyal clients. What you do is not as important as how you do it. If done effectively, they will cement the bond between you and your customers — and reap significant profits for your business.