Studying The Science of Retail Since 1979

In It To Win It! If you’re in the retail or restaurant business and you’re not paying close attention to loyalty programs, you should be. It’s hard these days not to – they’re everywhere. For example, it was no surprise to me that 86% of Canadians are members of at least 1 loyalty program. The average Canadian is a member of 4 programs and the average Canadian household is a member of 9 or more programs. Folks are collecting box tops, trading cards, stamps, points, and buying memberships anywhere they can, and they have been conditioned to do so by the chains that nationalize their programs. To my amazement, independent retailers and restaurants in Canada are not doing loyalty programs, much to their own detriment. Loyalty increases the frequency of existing customers and improves retention of new customers. Running a WagJag or posting a coupon in the local paper is much more expensive than marketing to your existing customers, and this has been mathematically proven over and over again. Unless you are deliberately trying to attract new customers so that you can capture them in your loyalty program, save your money and invest it in your own loyalty offering. Whatever promotion you offer, it should be intended to do four things: Drive more customers into your business Increase profits and revenue Increase stock rotation and preferably slow moving higher margin stock And provide you with customer data to remarket or analyze down the road. In my career here at Armagh, I have seen hundreds of promotions offered by my customers. Many of them, unfortunately, do not do what they were intend to do, so here’s a few things that I have learned along the way that might help you to customize your own loyalty program for your retail store or restaurant. Look Before You Leap Consider your point of sale system and include your service provider in the discussion. I have seen retail store and restaurant owners have meetings and print marketing materials and send out email blasts only to find out that the loyalty program they have dreamed up isn’t possible with the POS system they currently own. This usually leads to self-inflicted strained relations with their POS system provider and is completely avoidable by simply doing some homework first. Whatever you plan to do, it must be compatible with your POS system, as the POS system is absolutely critical in the tracking of whatever program you launch. If your POS system doesn’t have a points or loyalty program, or there is no compromise available between what you want to run vs. what is available in your system – you need to change POS systems. If you’re a new business owner and you haven’t selected your POS system yet, you should consider Catapult for retail or Digital Dining for restaurant. Both systems we offer have loyalty programs that are very detailed and easy to use, and even if you don’t select one from Armagh, you should use them as a benchmark for whatever system you ultimately choose. What’s In A Name? It must have a catchy name. I know. It’s cosmetic, and that’s unlike me, but it really matters what you call it. Remember, if you market the loyalty program effectively to your customers you’ll eventually have thousands of members and the program will be around for decades. You really need something that your store can be proud of and your customers can easily remember so they can pass on to other customers by word of mouth. It Must Be Well Planned They call them loyalty plans for a reason – they’re planned. Once you have a great loyalty program name, you need to carefully organize the details of the program. You can’t do this willy-nilly. If you need some professional paid help with this, get it, and I can’t stress this enough. You need a program brochure outlining the details of the plan so that your staff can easily educate themselves and hand out to customers asking questions about the program. You need a sign up form asking for the customers information so that your staff doesn’t unnecessarily tie up POS terminals with data entry. You need a customer card or key-tag so that customers can be easily recalled at the POS and their purchases and redemptions can be tracked with ease. You need to determine the percentage return on your loyalty plan and how your customers will realize that reward. Keep It Simple Stupid Remember who will sell this program – your staff. Make it too complicated and they won’t even try. Even if you sell the loyalty program yourself, remember who you want to join the program – your customer. Make it too complicated and they won’t try either. You should also actively try to avoid program contradictions with other marketing initiatives. It’s not a good program if it causes you to get into arguments with your customers over whether or not you’ll include one thing or another in your loyalty program. Make the reward calculation simple – it should be a points or dollar percentage return based on purchases, and your POS system should track it automatically. Beware of anything you have to mail, count, track, or redeem manually – it is unlikely that any plan you create that has an intense labour requirement on the part of you or your staff will be successful. Any promise you make that is not fulfilled is worse than making no promise at all. In other words, if you promise a customer you will mail him a gift certificate if his purchases reach a certain level and you fail to follow through because it’s too much work or you don’t have time to do it, your loyalty program will be contrary to your goals. Quid Pro Quo Don’t be afraid to ask for some information in return for a decent loyalty program and make sure your staff are trained on how to ask for it politely. Ask… Read More