Shop Talk: Practical answers for tough business questions.
Question: It’s time we begin a customer loyalty program. Can you offer details, such as how to make or punch the card and what has worked for other stores to reward customers?
Answer: The good news is you can create a loyalty program with parameters that work for your business. I commend you for asking about a plan, rather than just jumping ahead, because once you establish a program, it can be hard to change. Some retailers issue actual cards, about the size of a business card, and then purchase a specialty hole punch—one not easily duplicated, such as a heart or a diamond—to punch the card with each purchase. Others use a specialty stamp (we ordered a waves design similar to our logo in green ink) and have the employee initial the box after it is stamped.
If you do use an actual card, be sure to allow space for the customer to fill in name, phone, email address, home address, or whatever information you want to capture when they redeem their reward.
If you have or are considering a new POS (point of sale) program, most of them have a loyalty or frequent buyer function built in that allows you to easily set parameters to fit the program you want to create. This is the easiest way, because the computer tracks customer purchases and prints a reward coupon each time one is earned.
As for what reward to offer, I’ve heard of many different programs that retailers adapt to their region and clientele. The most popular are: Purchase $250 or $300 over any period of time and receive $10 off your next purchase; or, receive a stamp for a purchase of $30 or more per visit and once you have logged 10 such visits, receive a gift certificate for $30. With punch cards, you can track by item (get one punch for each book; purchase 10 books and get $10 off the next book) or by dollars spent: Get a punch for every $25 spent and get $10 to $25 off your next visit. You can set any threshold you want; just make sure the reward is comfortable to continue offering over the long haul.
First published in Vol. 26 No. 2 of Retailing Insight. © 2012 Continuity Publishing Inc. All rights reserved.