Punch cards. Points. Rewards. Discounts. Perks.
At some point in your adult life you’ve been propositioned by a brand to join a loyalty program. Whether it was signing up for a credit card with cash back rewards, point accumulation or the old-fashioned punch card system, you’ve heard of and/or been a part of a customer loyalty program. But do they really work? And more importantly how effective are these types of programs for Black businesses?
What Is A Loyalty Program?
For starters let’s review the basics. According to a 2021 Shopify.com article, “Customer loyalty programs reward customers who repeatedly interact with a brand.” This type of marketing strategy encourages customer retention and can (hopefully) sway them from patronizing competing brands. Examples of customer loyalty programs would be:
- Printed punch cards
- Point accumulation systems
- Cash back rewards
- Frequent customer discounts and coupons
- Email and text message discounts
Basically, the point of all loyalty programs is to encourage customers to become repeat patrons.
Should Loyalty Programs Be A Part Of Your Marketing Strategy?
Customer retention is always the focus of successful brands. As marketing case studies have proven, it is cheaper to keep an existing customer than to market and gain a new one. And since most people like the idea of getting more bang for their buck, customer loyalty programs are a component of most customer retention marketing strategies. But should they be apart of yours? You should consider these questions before jumping into the customer loyalty program pool:
Does your target customer need or want a loyalty program?
If you are delivering an excellent product or service as a black owned business, and have found loyal, repeat customers, you may not need a loyalty program. There may be no need for all the pomp and circumstance of this type of rollout. Now throwing in a freebie here and there for your stellar clients and customers is cool. Let the spirit lead you. But make sure you know your target market comprehensively before joining the loyalty program bandwagon. You want to make sure you’re not shortchanging yourself as a business owner in the end.
What type of customer would your business attract if you promote a loyalty program?
It’s important to think about customer attraction before customer retention. If you’re a new business, for example, offering a loyalty program out the gate can attract new customers. That’s a win when it works! However, how will those same customers move through your product or service ecosystem? Will they be shocked or upset paying full price for services or products in the future? Will they continue to shop without the perks of your loyalty program? These are all questions to consider BEFORE rolling out a loyalty program to attract new business.
Would a loyalty program cheapen your brand aesthetics?
Believe it or not, loyalty programs could possibly detour higher-end customers. Hear me out. If you have a luxury service or product, a loyalty program could cheapen the allure and aesthetic of your brand. What you don’t want to do is create a luxe and exclusive customer base only to make it more accessible to everyone. I know this has an elitist tone, but if your brand is servicing a higher-end clientele, you will want to be mindful of this. Just think, luxury car and bag companies don’t have loyalty programs, but they still have frequent and repeat customers.
Will a loyalty program turnoff your customers in general?
There are just some products or services that customers don’t (and shouldn’t) want discounts on. If you’re in the business of cosmetic surgery, for example, a loyalty program might be side eye worthy. There’s just something that should make you want to think twice about a plastic surgeon offering points or discounts on surgery. Really any medical, health, housing, legal and/or repair industries may want to pass on discount related-loyalty programs. That may not be the best look for your brand.
So…Do Loyalty Programs Work?
The short answer is it really depends. If your goal is to get customers in the door, online orders placed or butts in chairs, then yes. People will gladly frequent a business that offers some sort of discounts, points or freebies for shopping. This type of marketing strategy will work best if your goals are volume focused.
However, if you desire a more quality over quantity type of customer base, then you may want to pass on customer loyalty programs altogether. Your main marketing focus should be offering a stellar product or service and letting word of mouth do the work for you. Either way the decision is yours and ANY marketing strategy has the potential to work if you work it.