Are Loyalty Programs A Marketing Gold Mine?

This article is a reprint of Wise Bread's contribution to OPEN Forum from American Express -- where small business owners can get advice from experts and share tips with each other.

Advertiser Disclosure ▾

This page contains affiliate links from which we receive a compensation. Like many publications Wise Bread is supported by affiliate commission from partner companies whose products appear on our site. This may influence which products we write about and the location and order in which products appear. We aren't able to cover every product in the marketplace.

Wise Bread Picks

• Travel Rewards Credit Cards
• Cash Back Credit Cards
• 0% Balance Transfer Credit Cards

Customer clubs can dramatically increase customer loyalty and give you targeted feedback on your marketing. Or they can be a gigantic waste of time. How do you know whether it will work for your business?

Do a Little Self-Analysis

If you're running a customer club of any kind, have you taken a good look at it lately? It can be a valuable tool, a way to get cash in the door, increase customer loyalty, gain targeted marketing information, get customer feedback, improve customer service, and make more sales. Too often, though, small businesses settle for something much, much less than that: a sad excuse for a customer club, with a meaningless membership card and uninspiring perks.

Here's what you should be giving and getting with your customer club:

• You should be giving value to the customers.
• You should be giving a reason for customers to be loyal.
• You should be getting customer information.
• You should be getting targeted feedback on your marketing.

Are You Providing Value and Increasing Loyalty?

First, examine your customer club for value to the customers. What do you provide?

The most common (and, often, most useless) customer club is a free, opt-in system. For a little information, customers get a basic reward like one free coffee after you buy 10. What the business gains from these is merely a bit more information. The program doesn’t really provide value or give customers a reason to be loyal.

What if, instead of schlepping together a free but low-value customer club, you put together something really worthwhile? What if a customer had to pay to be part of your club, but in return they always got a 10 percent discount (retailers) or they always got free shipping (online sellers) or they always got a $5 lunch special (restaurants) or they always got rush status (service providers)?

A club that people have to pay to be part of conveys exclusivity, which is something customers tend to like. We all want to be somebody special. A club anyone can join without charge or consideration, and with very little effective value, is not going to give your customers a feeling of being special.

Are You Getting Information and Feedback?

Having a little extra cash up-front is nice for a small business, but that's not the sole purpose of your customer club. A customer club, full of loyal members who love being part of your business because you make them feel special is a gold mine of customer information and targeted feedback.

1. Your membership form should gather basic information and various methods of contact (address, phone, email). It can also ask lots of questions. The questions can be optional, of course, so someone in a hurry can skip them; you don't want to deter potential members with a lengthy questionnaire. Give them a bonus if they fill it all out.
2. A customer club is an automatically created mailing list. You've got a list of people who want to do business with you and several ways to contact them.
3. You can periodically send out surveys regarding your business and products to your customer club members. Offer an additional coupon or discount for customers who complete the surveys.
4. You can invite a limited number of customer club members to come in as "secret shoppers." You comp them a meal or a service or a product, and they fill out a detailed response or survey. You are getting feedback from the type of customer you want to have.
5. You can host customer club parties and special events (including online events and sales for "members only") that will help you get to know your best customers and their buying habits.
6. You can test out new product ideas on your customer club first; let them know it's an exclusive offer for members only and track how they respond.

That's just a beginning.

If you're not getting valuable information and targeted feedback from your customer clubs, you're doing it wrong. And you're wasting a huge opportunity to get valuable marketing help without having to a pay a PR consultant or marketing firm.

So, grab your pickax and start mining.