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Keep Them Coming Back

August 30th, 2011

 

I started my first business back in 1995. I was fresh out of college and a good friend and fellow graduate was freelancing as an audio engineer at a company that produced “on-hold messages”; the recorded music and voiceovers that play back through phone systems while a caller is on hold. He would tell me about how easy these recordings were to produce and distribute and how the production house had a nationwide client with dozens of locations. We formed a partnership with the belief that my gumption and his technical expertise all but guarantee our success.  How could we possibly go wrong?

We wrote a business plan and secured some money to buy a digital recording system. It was top-notch, state-of-the-art; the same gear all of the big guys used. We set up a studio/office in my partner’s two bedroom apartment, got a business phone, a fax machine, office supplies, and had everything in place that two novices in their early twenties needed to take over the world. Everything except… a customer. In the process of getting our systems in place to produce a product, it didn’t occur to us that our biggest challenge was not production, but finding customers.

Our education commenced. We tried a few marketing techniques and after some struggle, we had a handful of clients. But the learning process was tough and slower than we imagined, so when we finally got that first customer, the now-familiar business adage became crystal clear: it’s cheaper and more effective to keep a customer than to find a new one.

Does this sound familiar? You have a business up and running, you are surviving the economy, and you have happy customers. Now how do you get them to return to your business, buy more, and spread the word about how great you are?

Many successful businesses are accomplishing this feat through incentive programs. Whether we call them loyalty programs, rewards, or some other clever name, the concept isn’t new. The idea of “baker’s dozen” has been around for centuries. But loyalty and incentive programs do more than just “bribe” your customers into repeat spending. They can actually create stimuli, tangible and intangible, that draw a customer back and keep your business in the forefront of their minds (and hearts!) and ahead of your competitors.

Maybe it’s a simple punch card- “buy 10 get one free”.  Maybe it’s an elaborate, computerized tracking and rewards system like those we see at the grocery store chains and airlines. Either way, chances are you participate in at least a few of these programs as a consumer. If you are not sure, just check your key chain for those little tags or your wallet for a stack of plastic. Not only do these systems track a buyer’s spending frequency and patterns, they provide data for what a customer actually buys, allowing retailers to present offers on the products a customer really cares about.

So if you have a relationship with a business that thanks you for your patronage, knows what you like, gives bonuses for continuing to buy, and presents rewards for referrals, aren’t you more likely to do business with them? Isn’t this approach to business more attractive than a competitor whose owner just has the door open and his hand out?

So how does the small business owner enter this space and offer something more powerful, secure, and attractive than the old-fashioned “punch card”? There a variety of options including payment terminal based systems, software programs that reside on your PC, and cloud-based systems.

First, there are software programs available on traditional credit card terminals that use the device to connect to a data base that tracks points, rewards, and stored value transactions. These systems are usually based on cards with magnetic stripes or occasionally on a phone number or some other unique identifier. This option is attractive for the merchant who does not have a POS system, but still wishes to have a professional program that does most of the work for them.

Second, are point-of-sale (POS) systems. Many POS systems now have customer relationship and loyalty programs built right in. The great thing about these systems is that if you have one, you already made the investment and there is no additional cost to track and reward customers. Customer activity is usually based on a customer phone number or some other unique identifier, so there is no need for investment in card printing, unless you would like to use them as stored-value or gift cards as well. However, there are serious concerns about data security with a POS solution. What if your hard drive crashes? How will you recover the current status of your customer’s rewards? What if your network gets hacked or your store gets robbed? Whose hands will your customer’s data be in and what financial exposure or even public embarrassment does this present?

Third, are cloud-based systems. These are web portals that essentially replace software installed on your computer and data stored on a PC in your store. They generally work with any internet connection and offer flexibility with other add-on software components that may help manage your business.

Regardless of the system you choose for your business, having a consistent program will help you attract and retain valuable customers. The options and approaches to rewards levels, points systems, redemption levels, co-opted promotions, referral incentives, giveaways, etc. are endless. Find the one that works for your budget, your approach to doing business, and the kind of customer you would like to attract, and you can add immense power to you marketing efforts.

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* A baker’s dozen, devil’s dozen, long dozen, or long measure is 13, one more than a standard dozen. The oldest known source, but questionable explanation for the expression “baker’s dozen” dates to the 13th century in one of the earliest English statutes, instituted during the reign of Henry III (1216–1272), called the Assize of Bread and Ale. Bakers who were found to have shortchanged customers (some variations say that they would sell hollow bread) could be subject to severe punishment.  –Wikipedia.com

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Entry Filed under: Advice

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