Last week, our team attended the International Franchise Association (IFA) conference in Las Vegas. A number of the roundtables and sessions focused on attracting new customers, but little discussion around customer loyalty programs and rewards. As our team discussed the conversations and takeaways from the conference, I couldn’t help but wonder why the lack of focus on customer loyalty. After all, the digital marketplace has certainly changed the opportunities for these type of programs.
Do customer loyalty programs really drive business results?
Back when I was a youngster, our school actively participated in the Pizza Hut Book-It program. Now, I loved books anyway, but dangling the opportunity to get my own pizza?! I’ll admit, I am the youngest in my family so the allure of having something of my own and not sharing with my sisters was extremely appealing. Certainly, reading a few books seemed like a very small price to pay. I’m sure Pizza Hut also saw it as a small price to pay for getting my entire family into the restaurant.
Whether they meant for it to contribute to customer loyalty, I couldn’t say. I can tell you this simple program encouraged repeat business and worked to build a brand in my mind from a very young age. Give Pizza Hut credit for a long-term sales approach that built a personal experience with me (and millions of other kids around the world). All of those characteristics are also part of a great loyalty program—build the brand through personal experiences and encourage repeat business.
It’s cheaper to keep a customer, than to get a new one!
And, despite the range of costs often quoted, we can all agree that it costs less to retain a customer than acquire a new one. In the wake of the economic downturn, that’s a fact that more businesses (and in this case franchises) need to take to heart.
Not your grandma’s punch card
Studies say that the average American holds 14 loyalty club memberships. Seriously! But, on average they only actively participate in half of them. Why?
One explanation lies in the rapid changes in the way consumers make business decisions.
There are very few things important enough to carry with me at all times. My keys, my wallet and my phone. And, I can’t possibly find the room carry 10-20 paper punch cards everywhere I go (unless I am a hoarder). Businesses have digitized reservations, tweet about specials, mayors get free things on Foursquare, and some even have helpful blogs (yours truly).
No more paper punch cards!
How cool is it to buy someone a drink with a punch card (cheap), but with a phone, now that’s cool! A mobile loyalty card allows me to manage my loyalty program/punch cards on my smartphone. It’s the fastest, most likely way to get me into the store when I’m out and about. Let’s face it, I would rather be naked than without my phone.
Consumer behavior is moving towards mobile. It’s more convenient for me. It’s cheaper for you. And, you’ll save a few trees along the way. So go ahead…throw out those paper punch cards.
Based on the above scenario, we issued the challenge to the Local Matters’ labs group (a team dedicated to new ideas, technology and concepts). Boy did they deliver! Learn more about our mobile loyalty card application.
