Posted: 10:35 a.m. Thursday, March 14, 2013
By Victor Ho
If you don't have a loyalty program, you're not taking advantage of your happiest customers. Here's how to get started.
Marketing your small business is easier said than done. Maybe you’ve tried Google AdWords or created a Facebook page but were disappointed with the results or complexity. You may have considered daily deals but realized that selling products at negative gross margin to one-time customers is not a winning combination. So what’s your next move?
There are no silver bullets in marketing, but I learned one important lesson from the Fortune 500 clients I consulted for at McKinsey--the power of customer loyalty. For many small businesses, loyalty marketing may be the only marketing they need, because it builds upon their greatest asset: their most satisfied customers. Bain & Company famously wrote that it costs 6 to 7 times more to acquire a new customer than to retain an existing one. Though you probably can’t invest in loyalty like a Fortune 500 company would, there are steps small businesses can take to begin loyalty marketing.
First, invest in service. Zappos pioneered the mantra that customer service is the new marketing. An American Express study showed that 70 percent of Americans would spend more with companies they believe provide excellent customer service. Service is the strength of most small businesses, so you should be able to do this well immediately.
Second, build a robust loyalty program that:
I was chatting with a friend recently who said that he wished his favorite pizza shop around the corner had a “frequent flyer program.” Shortly thereafter, they rolled out a digital loyalty platform, and now that he’s earning rewards, he loves his shop even more. That love is likely to translate into 30 percent more visits over the course of a few months. And what did the pizza shop owner have to invest to get this return? A few free pizzas.