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Taking Stock: What keeps customers coming back?

Barbara Wold has more than 45 years of first-hand retail experience, and is one of the industry’s most sought-after speakers and consultants. In this article, she discusses about how to maintain customers’ loyalty.

The first and most important reason, of course, is the quality of your product or services and the way your company is run. If your sandwiches are lousy or customers have to wait too long at lunchtime, it won’t matter if you have a punch card for your sandwich shop. One of the best ways to cultivate happy, loyal, and long-term customers is to consistently give them an excellent product or service.

But this isn’t enough for every company, and even if you have a terrific product or service, you’ll need to make special efforts to retain customers. This is particularly true for new and very small businesses. So, consider how you might institute a "loyalty programme" to keep customers attached to you.

All loyalty programmes have basic attributes:

  • The customer gets a reward – a discount, freebie, upgrade or special service – for being a regular or big customer.
  • There is a way to keep track of the customer’s purchases –  you can have a sophisticated computer database, a handwritten ledger or a simple punch card.
  • Generally, but not always, the customer gives the company his contact information, which enables   the business to keep marketing to and communicating with him.

Some structures of customer loyalty/reward programmes:

A free reward after multiple purchases: Enticing customers to keep coming back to you by offering them something free after they make a certain number of purchases. Examples: a punch card at a car wash, where you get your 10th car wash free.

  • Buy-ahead discounts: A significant discount or freebie for buying multiple products or services in advance. For example, getting 12 months’ membership in a gym for the cost of only 10 when you buy the entire year at once.
  • Membership/clubs: Discounts or rewards for people who agree to sign up to be a member of your "club" and continue to be associated with you. Example: supermarket "clubs" with discounts in return for enabling the supermarket to track your purchases and communicate with you.
  • Upgrades/special services: Many customers want special treatment (or better products) because they see themselves as a valued customer. Examples include an upgrade to first or business class as a reward for achieving a certain number of frequent-flier miles or a hotel room upgrade after a certain number of nights booked. But it could be as simple as giving free conditioning treatments to a regular patron of a hair salon.
  • Discounts after purchase: Discounts given as a reward after a customer makes a purchase, to both encourage future purchases and to thank customers. For example, giving a client who’s just used your catering service a discount to receive free desserts for their next catered event.

From time to time, evaluate the cost of your loyalty/reward programme. Are you giving free stuff to customers who would have been buying from you anyway? Are your rewards eroding away your profit margins significantly? If so, adjust the terms and nature of your programme.

Don’t forget: The longer a customer remains with you and continues to buy, the more profitable the relationship. That’s why it pays to reward customers and keep them loyal to you.


Taking Stock is Retail in Asia’s fortnightly column dedicated to showcasing opinions from experts in the retail industry.