I don’t know about you, but I’m pretty darn loyal to my airline.
The fact that I booked a round-trip flight to Rio de Janeiro for approximately $60 in taxes just from points I’d earned from being “loyal” to them pretty much did it for me.
That, and the fact that just because I carry their credit card means I get a free checked bag on domestic flights. (If you knew me, that’d sound totally bogus. I’m definitely a carry-on only type of traveler. But that ‘bonus’ still gets me.)
And the fact that I can earn loads and loads of points for even more free flights like the one to Rio just for using their credit card.
It also helps that they’ve partnered with a credit card company that’s got incredible customer service.
Oh, and that time I missed my flight so they so kindly put me up in a hotel for the night while I waited for the next available flight.
I use American Airlines, by the way. And no, I have absolutely zero financial motive to recommend them to you.
I just want to show you how over-the-moon in love I am with them.
Honestly, I might be more committed to them than I am to my boyfriend, and I like him a lot.
Only time can test that commitment level, but as far as the business lesson here goes, I think you can see how crucial it is to have some sort of loyalty program.
Because feelings aside, the data tells us it’s important too:
- It can be up to 10x more expensive to get a new customer to buy than to sell to an old one.
- Old customers spend an average of 67% more anyway.
- The average US household actively participates in 12 different loyalty programs.
Yeah Chelsea, but my business isn’t an airline. I can’t afford to give away free flights or hotel nights.
Believe me, I get it.
I’ve got a business too, and I sure as hell can’t afford those kinds of things for my customers.
But I’ve realized that if I want my business to grow in the way I envision it—for it to be this wonderful, helpful place where people’s connection to what I teach can help them grow their business… and for me to make good money doing it… I’ve got to find ways to make people loyal.
I send out emails to my list every time I publish a blog post, but I’ve started to focus on customer loyalty a bit.
For example, every time someone buys a success planning session from me, I treat them to a hot beverage of their choice.
And if we aren’t in the same city, I send them a $5 Starbucks gift card for them to buy the coffee for themselves.
The effect of this is two-fold:
- Hot drinks light up parts of our brain that make us “warmer” to each other.
- Buying them something, even though it’s included in their fee, invokes the reciprocity principle that’s innate in us as humans.
And I find it works pretty darn well.
But what if your business isn’t exactly like mine?
What if you’re not an airline or a B2B agency/service provider?
What kind of loyalty marketing program can you put in place that will keep your customers loyal, but not cost you an arm and a leg?
In this post, we’ll run through 5 different examples of great loyalty marketing programs to spark ideas for your own company.
1. Up-Front VIP Fees
You know how Amazon Prime costs $99 per year upfront?
The exchanged benefit that customers get for paying it is free two-day shipping on most items on the website.
Further, because the cost is so low for year-long fast & free shipping, Amazon actually loses up to $2 billion per year according to analyst estimates, just because that kind of fast shipping is normally really expensive.
But, because individual customers have each fronted nearly $100 for the service, they feel more obligated to make that fee worth it, and are more likely to shop on Amazon for their needs.
In fact, in 2015, the average Prime customer spent $1,500 per year on Amazon, whereas the average non-Prime customer spent $625.
So, basically, this particular loyalty marketing strategy is an exercise in reverse-psychology: charge people upfront for benefits that most companies would make you “work” for, and watch people become fiercely loyal out of their initial investment.
So think about it for yourself: what are some ways you could apply this principle to your company?
Hint: Works best with businesses who have large customer bases, such as B2C.
2. Proofs of Purchase
Remember back in the day when you’d collect proofs of purchase from cereal boxes and mail them in with the $5 you begged from your parents for some cool, exciting prize?
Or when McDonald’s used to host their Monopoly game every year so that when you collected a certain number of stamps, you’d win a free meal? Or maybe even $1 million?
Or even how sending in box tops and tabs from coke cans meant your child’s school or a medical organization could get more funding?
It’s all the same idea: to keep people coming back, to make them “prove” their loyalty to you, and in exchange, they get something from you.
This type of strategy works really well with commodity items like cereal and fast food, because they’re things people would be buying anyway.
The only difference is, with the promise of a “prize” for buying one brand over the other, people can easily make the choice to buy your product instead of your competition’s.
My mom still collects bottle tops and enters coke points online every week.
Even though she hasn’t redeemed them for anything in a long time, she has gotten really cool stuff like a tea pot, an olympics-themed tote bag, and magazine subscriptions absolutely free in exchange for being a loyal Diet Coke drinker.
Most of you reading this blog probably don’t do the marketing for internationally-recognized brands, but the concept is still the same.
I think every single local coffee and sub shop I go into has some sort of loyalty card where if I buy a certain number, I get one free. This is kind of the classic, go-to example, but what if instead of a free drink or sandwich, you got a little creative and offered them something else?
Like a $5 gift card to a local grocery store? Or a free item they can take home with them and use?
Suddenly it’s a little more interesting than saving $6 on a sandwich, isn’t it?
With the novelty factor a little more interesting, people are suddenly way more enticed to participate in your loyalty marketing program and keep buying from you.
3. Be Charitable
Surprisingly, you don’t always need to give something directly to the customer for them to be fiercely loyal to you.
If you show an interest in giving back to funds and causes you know they believe in, you can almost always incite loyalty.
Better yet, you might not even have to be the one to start this type of loyalty program—you can just join in on a successful one that’s already happening.
On a national scale, we’re all familiar with the Box Tops for Education campaign.
Since nearly everyone agrees that children’s education is important, this campaign has been around and successful for years. Heck, I remember it from when I was in elementary school.
It works like this: you collect box tops from General Mills products you buy, clip them off the top of the box before recycling, and send them with your child to school.
Every box top is worth $0.10 donated to your child’s school, so the more your participate in buying General Mills products, the better.
Genius, isn’t it?
And yes, this program is exclusive to General Mills… but let’s say you run a restaurant where you sell cans of coke or beer to your customers.
Instead of just shuffling the cans off their tables when they’re done, you can ask them to remove their cans’ tabs and put them in your collection box for the Ronald McDonald House.
You’re not out anything, but the fact that you’re being charitable—and giving your customers the opportunity to physically participate and feel good about themselves—means that people who eat (or rather, drink) at your restaurant will be instantly more loyal to you because you’re “good.”
(I don’t know a single person who isn’t all about helping sick children feel better.)
4. Multi-Company Partnerships
If you run a business selling kitchen cabinets and counter tops, you’ve probably noticed you’ve got a few different types of customers:
- Residential DIY customers who are one-time customers re-doing their kitchens
- House flippers, who come back to you multiple times for each new project they take on
- Contractors who do the planning and building for their clients, but need a good place to buy the cabinets from
Depending on which customer type was the most common and most profitable for you, you could form a partnership with another business that serves the same target audience and offer some deals together.
Let’s say the contractors are your most common and most profitable type of customer.
If a lot of these contractors are assisting in full-on kitchen renovations, you could partner with a flooring company or an appliances dealer to offer combined packages at a slightly discounted rate, but that would ultimately mean more sales for all parties involved.
Your partners will be loyal to you because you’re bringing them more business, and your customers would love you because you’re getting them deals they can’t get anywhere else.
It’s a win-win-win scenario.
5. Short-Term Contests
If you’re in a business slump and need a fast boost, running an attention-getting campaign in the form of a contest is a great way to create feelings of attachment towards your brand.
Particularly if you’re giving away your own services.
I see loads of companies trying gimmicky contests where they’re giving away free iPads, and I can’t help but cringe when I see it.
Yeah, iPads are cool and a lot of people would want a free one. But a lot of people who aren’t part of your target market will probably join in on the contest just for the sake of the iPad without caring about your actual business.
This means they create more work for you without adding anything to your business in the long run.
Instead, give away a free session. Or a free set of sessions. Or a gift basket of your products or products related to the services and expertise you offer.
If you work in the natural health niche, you can probably assume that a lot of people in your target audience like Apple products.
But the promise of an iPad is so far disconnected from your vitamin assessments or your chakra-aligning massages that people will get excited about the iPad without even considering your services.
Instead, if you gave away a set of three massages and a custom-tailored 30-day supply of supplements, that’s be a prize your target audience would still be just as crazy about, but it’s a prize that would only attract the right people.
Plus, during the duration of the contest, you’ll do a lot of talking about the benefits for the prize to get more people to sign up, so people will become attached to those end benefits and be more likely to buy from you later on, even if they aren’t winners.
Okay, so, got any ideas flowing yet?
Like I mentioned at the beginning, just because we don’t have the budgets of big-name airlines to keep our customers loyal doesn’t mean we can’t have customers that aren’t over-the-moon in love with us.
In fact, quite the opposite.
Buy only spending $5 on someone who’s already decided to spend at least a few hundred with me, I only off-set my immediate profit by a few bucks, but I raise the long-term profitability of that client significantly. (Remember how I said I buy my new clients a hot beverage?)
That, and because my business is so small, it automatically has that personal, one-on-one feel that bigger companies like airlines spend boatloads of money trying to to replicate. (It’s like a loyalty feature that’s automatically built in!)
But beyond these really simple measures, doing things like hosting a contest or giveaway, doing a proof-of-purchase promotion, forming customer-benefitted partnerships, being charitable, and offering “exclusive” VIP options are great ways to build in even more loyalty to your business—making your competition more or less irrelevant.
What are some other ways you build loyalty in your business? Let us know in the comments, and help your fellow small business owners spark their own ideas too.