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Rewarding the Repeaters

Loyalty programs can keep your best customers coming back for more.
January 19, 2010
URL: http://www.entrepreneur.com/article/204762

A well-known business maxim says it's easier and less expensive to get repeat business from your customers than to constantly find new ones. That's why incentive and loyalty programs have proven so popular among small-business owners.

These programs include the following:

That's an example of getting it right. But it's all too easy to get these programs wrong. You can alienate a customer if your rules are too complicated, the reward is too difficult to redeem, or the offer isn't of interest. Consultant Joni Daniels points out that most small-business owners think about "what makes sense, motivates, or excites them," not their clients.

Small-business owners make one common mistake over and over, says Richard O'Malley, president of The O'Malley Project, a business consultancy. That mistake? "The offer is usually something the owner doesn't particularly value. It is a half-hearted attempt, at best, to seem like they are giving the customer a 'deal.' A true incentive needs to show value on both sides."

In other words, when incentive or rewards programs don't work, it's often because the programs focus on what the owner wants, not what the customer or client values. Doing a little homework ahead of time can help you makesure your incentive program does exactly what it's supposed to do.