Loyalty Programs

Written by Linda Alexander
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Loyalty programs reward customers for shopping with you. Airlines have been doing this for years with their frequent flyer programs, and retailers have also offered frequent buyer cards to reward customers with free items after they purchase a certain amount. Many, many products and services work with this type of program.

One to one relationship marketing gets difficult however. The larger your company, the more rewards you need to give. Also, you should consider having several levels of your loyalty programs, so that the customers who spend more, earn more rewards. There again, this is tricky to implement, so it helps to have an agency and a good IT team that can handle the logistics for you.

Increasing Profit Margins with Loyalty Programs

By introducing loyalty programs to your customers, you will actually increase your profits. This is because your customers will be buying from you more than your competitors (the "loyalty" part); you will also be giving fewer discounts to non-members of your program. That way, less money is wasted, and your most profitable customers keep coming back.

Nurturing your existing customers is always less expensive and more effective than spending the money to get new ones. Since referrals mostly come from existing customers, it's easier to get new customers through your current ones anyway. So take good care of the customers you already have, and they will keep your business alive and thriving well into the future.

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