How to Use a Loyalty Programme in Your Franchise
Keep Customers Coming Back

Author: Franchise Finder

Many franchise owners invest considerable resources chasing down new customers but did you know that it’s your existing franchise customers on whom you should focus your time and money? Existing customers spend up to 67 % more than new customers, claims Inc. Magazine and, not only that, it actually costs you less to retain and grow your franchise business with existing clients than it does to acquire new ones. One of the ways you can work to keep customers faithful to your franchise is through a franchise loyalty programme.

What is a franchise loyalty programme?

Quite simply, loyalty programmes reward your customers for the money they spend with you. A loyalty programme is an acknowledgment that you value your customers’ repeat business.

Advantages of a loyalty programme for your franchise

In these tough times, indications are that customers are increasingly using loyalty programmes to help increase their purchasing power. A good customer loyalty programme can benefit your franchise by:

• Encouraging customer retention – who doesn’t like to be rewarded for spending money?
• Encouraging the acquisition of new customers – some potential clients are won over by appealing loyalty programmes, so yours might just give you the edge on your competitor!
• Encouraging lower-spending customers to spend more – called up-selling
• Discouraging non-profitable customers – every business has customers who only ever buy the cheapest products or services and these so-called ‘cherry-pickers’ are often time-wasters. Designing a loyalty programme which targets those who spend more will weed out the cherry-pickers from the clients worth keeping.
• Building client relationships – earning rewards for their purchases can make customers feel special; they’ll appreciate their business being appreciated.
• Building brand advocacy – customers who are impressed with your rewards programme will be sure to spread the word about what a great brand you are.

Create your own customer loyalty programme

Before investing in a franchise rewards programme, take some time to think about what you hope to achieve. Identify clear goals – do you want to:

• Up your sales to existing customers?
• Win new customers through client referrals?
• Market a particular product or service?

Types of customer loyalty programme

Rewards cards

Customers get a printed card, about the size of a business card. Every time they make a purchase over a certain value, boxes on the card are ticked off or stamped, until the card is full. Then, the customer is entitled to free merchandise of a certain value. A reward card loyalty programme is simple and cost-effective to implement, and works well in fast food and restaurant franchises, as well as service-oriented franchises, like hair salons.
Real-life example: Kauai Rewards Card.

Cash-and-Points Loyalty Programme

Customers earn points for cash spent, which they can redeem for merchandise or cash-back vouchers.
Real-life example: Clicks Clubcard; Exclusive Books Fanatics Club

Membership Loyalty Programme

Customers subscribe to a club to earn rewards, like members-only special discounts and exclusive offers. Real-life example: Edgars Club

Tiered Loyalty Programme

Such programmes reward a customer’s initial loyalty and encourage further spending. As customers move up the loyalty ladder, they gain access to bigger and better rewards. So, once customers accumulate a certain amount of points they can choose to cash in their points at Tier One to receive special merchandise, or hold onto them to cash in at Tier Two, and receive a bigger prize. Most tiered loyalty programmes have three tiers. Real-life examples: Virgin Airlines Flying Club; Woolworths Rewards Programme

Coalition Loyalty Programme

By strategically partnering with other companies, coalition programmes offer co-branding deals, to everyone’s benefit.
Real-life example: American Express Rewards Programme

Looking for an easy-to-manage customer reward?

Take a look at these:
Compliments Gift Cards – perfect for one-off customer rewards, they’re redeemable at over 120 000 Mastercard outlets throughout South Africa.
Compliments Exclusive Incentive Cards – are re-loadable, suiting long-running incentive programmes, and give the card-holder access to 5000 stores across the country.
Both Compliments Gift Cards and Compliments Exclusive Incentive Cards are supported by Standard Bank and Mastercard and can be customised to reflect your brand.

Author: Franchise Finder, Online Directory of Franchises and Business Opportunities in South Africa