26 September, 2019

What Small Town Economies Can Teach Us About Customer Loyalty

Remember how commerce worked in small towns 50 years ago? You had to go to a store downtown to get what you wanted. The shopkeeper knew your name, your family and what was going on in your life. Sometimes he or she would give you a discount knowing that you had a big event coming up, or agree to delay billing till the end of the month. Businesses built relationships with their customers because that’s how you stayed in business. Those were the good old days.

If you are operating a retail store or a coffee shop (or several) in a bigger city, what can you do to build your business through your already loyal customers?

The answer is simpler than you might think. Do the same as the small town shop keeper, but at scale: personalize your messages and offers to each of your clients. Take advantage of technology to help you get there.

That’s how successful businesses implement their loyalty programs today: through personalization and meaningful rewards.

  1. Personalization. Nobody likes generalized canned messages, customers have developed a blindness to them. The way to use personalization at scale is to algorithmically analyze what, when and how often your customers purchase from you and generate messaging and rewards based on the patterns you identify.
  2. Meaningful rewards. There are plenty of brands out there happy to give you an extra 10 “brand bucks” on top of your $50 purchase. That’s not a reward, it's a bait and switch. If you expect loyalty from customers, show them loyalty first by offering them something significant.

Personalized messaging then and now

Bonus hint: make the redemption barrier low. Most programs make the mistake of making customers wait too long before they can redeem their points (I still have my KLM points I started accumulating 10 years ago!) One of the first companies to revamp their reward program to offer options for lower points was Starbucks in 2019 with significant results.

In the end, you want your customers to feel like your brand goes above and beyond for them, which will leave them wanting to do the same for you. That’s how loyalty works.

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