National Loyalty Program for SMBs

National Loyalty Program for SMBs

Small and medium sized businesses, particularly in the retail, food/beverage and entertainment industries get deluged by sales representatives of companies offering what they consider the Holy Grail of repeat customers… the loyalty program card. Popularized by the airline industry as “frequent flier” cards, the concept is now widespread and includes the consumer’s spending on credit cards, at casino’s, gas stations, groceries, restaurants, car rentals and many, many more. All of the cards are based upon the single marketing concept that new customer acquisition cost is much higher than maintaining a relationship with an existing customer and getting them to come back.

As a side note, it seems the only industry that has not figured that out yet is the cable television industry. Every week, consumers are slammed with FSIs in the newspaper, direct mail, email marketing campaigns, website banners and search engine marketing. The average customer probably accounts for about $1000/year in billable, yet there is no marketing to their existing base. DirectTV, Verizon, Time Warner, AT&T, DirectTV and all the others spend all of their marketing effort on new customer acquisition rather than loyalty within their existing base. They offer deep discounts for the first year, but only give you a 1 year contract. They are essentially betting that you either won’t notice your cable bill doubling in a year or you are too lazy to switch. Offering a simple loyalty program for them would pay huge dividends. After 1 year, get a speed upgrade on your Internet. After 2 years, earn an upgrade to a better DVR with more capacity, after 3 years a new router that offers faster WiFi. Such low cost upgrades would significantly decrease switching costs.

National Loyalty Program Options

Back to the SMB… a few companies such as Belly, Hilton, GamEffective and FiveStars are trying to find a niche with the businesses that are too small to create the software or analytics behind a modern loyalty program that is all their own. These companies promise that they will bring the SMB new customers and build loyalty with your existing customer base. They show how you can run additional specials and campaigns through a website that will communicate with the card holder.

The average American, according to the latest survey by Colloquy – a trade magazine for the loyalty industry – has 29 memberships in various loyalty programs. Companies like Belly and FiveStars are offering a loyalty program card that makes the consumer, if anything, loyal to the card… not the SMB. That loyalty company is telling your competitor down the street that they will build their loyalty program as well. How can you have a shared loyalty card between you and all of the competitors in your trade area? Those cards are attracting the discount shopper, not a customer for life. All you have done as an SMB marketer is found yet another way to communicate a discount to those that only shop with coupons.

Look at how the pizza delivery restaurants have fared with their coupon/discount strategy. People are now accustomed to purchasing their pizza from a small handful of nearby pizza parlors, all of which are acceptable to that consumer – based solely on who has the best coupon. It has gotten so bad that many of the larger chains, such as Domino’s and Pizza Hut, simply put their coupons on their website. They are virtually guarantying that every order will have a discount attached.

The Belly and FiveStars programs, and the like, are driving your SMB business to the same end as the pizza parlor. Offer the program to all of your customers and they can build points toward free items at your location as well as build points toward other vendors in the loyalty program. The Belly website even suggests that you visit Belly companies when you are out of town to build up points. The Belly customers are being motivated to be loyal to the Belly card, not the SMB paying their bills. What kind of loyalty program allows you to build up points by visiting both my store as well as my competitor’s store, simply because we both signed up with Belly? Worse yet, you have now taken all of your current loyal customers and offered them a discount and exposed them to messaging from your competition.

Nothing will increase customer loyalty more for an SMB than a good product with good service and a reasonable price. However, if a SMB is compelled to take 20% off sales with their best customers, they should consider a loyalty program that is just for them. Their credit card processor will offer them as well as some of the big cash register companies. Although expensive, at least they aren’t associated with the competition.

Create Your Own Loyalty Program

Better yet, create your own loyalty program based upon a simple point system. A point for each visit, or each purchase… and then reward the customer with a discount, a free item or swag – can work. Keeping the loyalty program simple works for Southwest Airlines, and they have amongst the most loyal consumers around.

In the end, with 29 loyalty cards in their customers’ portfolio… most SMBs should just forget about the loyalty program altogether and simply build an email list of customers, their birthdays and any special likes. Homegrown CRM will earn you more loyalty.

2018-02-20T02:04:03-06:00 By |Loyalty Marketing, SMB Marketing|0 Comments