Keeping your best customers loyal to your store can be a cost-effective way to increase business when compared with the expense and effort of attracting new customers, said Kirsten Darrow, marketing director of Fred Meyer Jewelers.
Darrow’s presentation, “Loyalty Programs Increase Your Profits,” given on Wednesday, focused on ways jewelers can build and maintain customer loyalty programs and how successful they can become as a tool to grow their businesses.
Darrow said loyalty programs can help jewelers expand their businesses through their existing customer base. “You do that by rewarding your best customers through their purchasing activities,” she said.
Darrow said that developing a loyalty program combines science and art. She noted that it’s five to seven times more expensive to attract new customers than it is to keep a store’s best customers.
Even though it’s less expensive, building a program does require a dedicated budget. She noted, however, that loyalty programs can be tailored to the resources a store has. “Building loyalty does not have to be a big production,” she said.
Most loyalty programs are made of hard and soft benefits, she explained. Hard benefits are ways to deliver economic rewards to customers. Soft benefits are used to deliver recognition and special privileges to a store’s best customers. She said most people, with the exception of affluent customers, prefer hard benefits.
Building a loyalty program requires a way to communicate with loyal customers and a method to collect and use data. One way to begin collecting data is to hold a contest that requires people to provide their personal information.
A program also must be analyzed and updated on a regular basis to ensure that it’s providing a return on the investment while meeting customers needs.
“Start small, target small groups,” she said. “Do it with a plan and determine what you want to accomplish. Fine-tune and grow your program.”