in the small business race, the business with loyal customers gets the gold.

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“business is slow and it’s so competitive, and the usual ways to get customers in the door no longer work.”

“i need to increase revenue, but on top of everything else, i don’t have the time or money to spend on marketing or advertising.”

when chatting with small business owners, these are the things we hear most often.  we all want and need new customers, but they are expensive to get.  however, there is a golden opportunity that some businesses haven’t realized is right in front of their noses: their current loyal customers!

did you know that 80% of your sales come from only 20% of your customers? not only that, but those loyal customers, who already know and love your business, spend 67% more money than new customers do. now what if you were able to get that same 20% to spend even more?  with a loyalty program that rewards those top customers, you can.

implementing a customer loyalty program doesn’t happen overnight; it’s a marathon not a sprint.  if you aren’t prepared, your competitors could outrun you. they may even lap you a few times. we’re here to make sure that doesn’t happen with six easy to remember steps. ready for your basic training?

1. prepare for the race: what business goal do you ultimately want to accomplish?

there are some initial questions you need to ask yourself before you get started. what are the goals you want to achieve? do you want to increase customer ticket size or visits? do you want customers to visit during specific slow hours?  do you want to drive word-of-mouth on social media? set these goals first, so you can design your program around these goals and measure your roi later.

now you can decide how your customers will sign up and interact with your loyalty program. you can create a classic punch card or email signup list, but if you have a point-of-sale or computer, the best (and easiest) way to collect your customers’ information is to do it right on the pos. whether you use a specific pos loyalty program, or a universal loyalty solution that integrates with your pos like fivestars, technology can do a lot of the heavy lifting for you when it comes to collecting and maintaining your customer information.

2. get on your mark: to encourage repeat visitors, set up an enticing reward structure.

create a reward program that it is attractive and memorable enough to encourage more frequent visits from your customers.  for example, there is a breakfast spot that i love to grab pastries from when i have a little extra time in the morning. the little griddle rewards me with a free espresso drink after i get 7 points with my fivestars card. since i get a point for every $5, i found myself getting an extra donut because i wanted that extra point. when i knew i was only a point away from 7, i went in the very next day to get that free large latte. nothing brightens a dreary morning like a free coffee.

when customers behave this way, there are two things at play: increasing ticket spend and reducing time between visits. little griddle’s reward structure is set up so that customers are encouraged to spend a few extra bucks to earn a point, and on top of that, the amount of time between customer visits is shortened. customers who normally visit once a week are now visiting twice.

3. get set: prepare your employees and make it easy to sign up.

training your staff is crucial to a successful reward program. if you customers aren’t told about it, they won’t participate.  do role plays with them so they are comfortable asking every customer to sign up, or provide a script.  also, put up marketing materials that tell the customer about your loyalty program so if your employees forget to ask, the customer still has an opportunity to learn how they can join.

4. go sign up your customers!

time to launch your program. this is the part that requires some effort. making sure to ask every customer for their email or phone number, or handing out a loyalty card every transaction is rough at first. you’ll have some customers decline or rush hour hits and it is difficult to squeeze in the time for “do you want our punch card?” but in the long run, it’s worth it for you and your employees to push through those objections. after all, you will be able to connect with those hundreds of customers in the next step!

5. stay hydrated: cultivate your new customer database by connecting with them via email, text, or social networks.

increased customer visits won’t start immediately. so in the meantime, connect with your customers who have signed up! many integrated loyalty programs allow you to email or text message your customers, allow customers to send you feedback, or automate posts about your business on facebook.  sending customers promotions or daily specials, or interacting with them online, keeps your business on the top of their minds. then, as customers eventually start experiencing rewards, you will see their visit frequency increase even more over time!

6. finish strong: measure your roi and make adjustments to improve over time.

a good time to measure if your customer loyalty program is on track is after 3 to 6 months. at that point, you should have grown your customer database to, at minimum, a few thousand, if not more. to calculate your loyalty marketing roi, dig into these questions: how many of your customers participated in your loyalty program? did ticket averages increase over time? how many customers redeemed rewards? how many came in the door when you sent them promotions via email or text?

retailers with loyalty programs, on average, are 88% more profitable than competitors who do not. however, if there is one thing that will prevent you from a successful loyalty program, it is poor customer service. you could do all the above steps perfectly, but if you don’t deliver a great customer experience with it, all your hard work will go to waste. 7 in 10 americans said they were willing to spend more with companies they believe provide excellent customer service, so make sure you don’t drop the baton!