The Most Powerful Growth Strategy For Your Business

When anything survives for thousands of years, you can generally be sure people like it. While not universally true (as in the case of taxes!), when there is a benefit involved and little or no additional task involved, people react positively. Such is the case with loyalty programs. Long before money was invented Egyptian pharaohs issued tokens to workers that could be redeemed for bread or beer. This provided loyal workers for temples and other public works. 

The modern loyalty program in America really isn’t modern at all. A grocery store in the northeast around 1790 gave customers copper tokens based on their purchases that could be used on future shopping trips.

While the current loyalty programs utilizing the scannable cards or key fobs developed about 30 years ago and are still going strong. Many people still remember the fun of filling little booklets with hundreds of S&H Green Stamps, Plaid Stamps and others. While these stamp loyalty programs were popular in the 1950s, the first use was in the 1890s!

So yes - people like getting something extra. But is it worth the extra cost for businesses to build customer loyalty?

According to a report from Bain & Company, a 5% boost in retention calculates to a 25% increase in profit! That is the most powerful growth strategy for your business. Not only do existing customers spend more the longer they continue to work with you, the high cost of new customer acquisition is eliminated. And in many cases new customer acquisition will involve more time commitment and lower margins which can negatively impact your business health. The old saying that “We lose money on every new order but we make it up in volume”, was alway intended to be sarcasm.

As I have mentioned before, promotional products media professionals have a great advantage when it comes to customer loyalty. We can use corporate gifting on a regular basis and do it wholesale! More importantly however is helping clients design, build and reap the benefits of a loyalty program.

While our industry has several good suppliers who provide turnkey programs for point redemption, awards redemption and other configurations, we can also construct unique programs for specific accounts.

For example, a small hardware chain with only a few stores was competing with the well known big box retailers. Their promotional products media professional built a program that revolved around customers receiving great tools based on their purchasing history. Not wanting to be in competition with themselves, a dozen “specialty” multi-tools not generally available at retail were chosen. All had the store brand imprint. Some were great for hanging on a keychain, while others were perfect for a backpack. Each month a different tool was available.

Another program that was highly successful was for the athletic department of a university. It involved creating a custom vinyl collector’s album, similar to the old business card indexes, that provided for the collecting of special limited edition sports player cards. The album and first card were given when tickets for the first game of the season were purchased and new cards were given at successive games throughout the season. A few completed albums were raffled off at fundraisers each season generating additional revenue. Season ticket purchasers also received their complete albums at the end of the season. 

One of the best loyalty programs I came up with years ago ran for more than 20 years! My father, who was in the wholesale auto parts business, mentioned that the most profits a car dealership produces comes from the service department, not new car sales. With the supply chain difficulties and super high car prices, this might be a program that is ready to come around again. The program is based on data that shows that almost every car buyer (new or used) has at least one other automobile. As an exclusive benefit to a purchaser a service discount membership card was issued that granted a 10% discount on any service on the car purchased or any other car owned by the customer.

This exclusive “benefit” was worth hundreds of dollars in discounts during future years and was enthusiastically embraced by customers. For the dealership it brought many additional service customers, most for work on out of warranty cars which increased profits even more and servicing the cars gave the dealership the advantage to sell replacements when the customer was ready to upgrade.

Also keep in mind that once a business puts a loyalty program in place it is not easy to discontinue it. Properly structured that makes it as good for you as for your client. 

One final comment is necessary. Don’t stop looking for new business! At the very least it is necessary to deal with lost customers (out of business, mergers, one shot projects, etc.), but keeping existing clients is (should be) Job Number One.