Loyalty incentive programs are nothing new. Ever since man made his first sale, he’s been looking for ways to get repeat business. Rewarding customer loyalty is a time-honored way to get that repeat business. What's changing in customer loyalty rewards programs is the number of benefits involved in joining customer loyalty programs, for both the business owner and customer.

With the growth of loyalty incentive programs, it’s important to design a customer loyalty program that’s unique for your business. The data tracking that many loyalty card program vendors offer as part of their services lets you mine that data, so you know exactly how to set your rewards apart from your competitors.

As you look at customer loyalty programs news and trends, you'll notice a number of key factors emerge that are important to business owners as they manage their customer loyalty programs. These factors include:

1. Customer loyalty rewards that are practical for the business to give, as well as for the client to receive.

2. Loyalty programs that are cost-effective to manage.

3. The continuing growth of small business loyalty programs, customized specifically for smaller businesses.

Action Steps
The best contacts and resources to help you get it done

Find articles about customer loyalty programs

Read these articles to find news and trends within the customer loyalty industry. Also watch for ideas you can adapt to your own rewards program.

I recommend: Walker Information provides a library of articles on loyalty incentive programs in its Creating Loyalty Library. You can search the database to find information about loyalty programs that match your specific industry or business. TechRepublic offers a number of white papers and articles on the subject of customer loyalty programs.

Sign up for newsletters and magazines from loyalty incentive programs vendors

These periodicals written by experts in the field can guide you toward ways to make your rewards program profitable for your business. You can also track the latest news and trends within the industry.

I recommend: The “Loyalty Matters” newsletter published by Maritz can give you plenty of ideas for your customer loyalty rewards program. COLLOQUY, a consulting firm that specializes in loyalty rewards programs, offers a newsletter. Leading consultants write on a number of topics that can give you ideas on how to improve your customer loyalty program.

Read blog entries that cover loyalty rewards programs

These blogs are often the quickest way to track the latest customer loyalty programs news and trends. Many blogs offer RSS feeds or email notification so you can quickly know what's happening in the industry.

I recommend: The Aquent Talent Blog has blog discussions on customer loyalty and rewards. Dave Taylor’s Intuitive Systems website has several blog entries on customer loyalty rewards programs and their implications for business.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Make full use of the services offered by customer loyalty rewards. As the competition increases between loyalty card program vendors, you are sure to see these companies attract your business with special offers.

Over three-quarters of U.S. consumers carry at least one loyalty card, according to business intelligence company Jupiter Research. Is that card yours? If not, don't fret. A business can't buy its customers' loyalty — it must earn it. Building trust among customers and clients will keep them coming back for more. And when they do, your business will see big results. Unlock loyalty with:

1. Unique products
2. Excellent customer service
3. Helpful employees
4. Smart marketing

Action Steps
The best contacts and resources to help you get it done

Set customer loyalty goals

If you want to recharge your customers' batteries, you'll need a plan for doing so. Decide what you want to accomplish with increased customer loyalty.

I recommend: Service Quality Institute offers a full range of customer service training materials and solutions aimed at helping you develop more customers, more sales, loyal customers and employees devoted to making your customers happy.

Start small

Remember that customer service counts. Build loyalty effectively and inexpensively by answering your customers' questions, answering your business phone when it rings, and always saying hello and goodbye to your patrons.

I recommend: Learn the basics of good customer service at AllBusiness.com's "10 Rules for Great Customer Service."

Hire service-minded employees

Foster increased loyalty with a staff that is naturally helpful and friendly. Hire for personality rather than skills; you can't teach a positive attitude.

I recommend: Consider giving potential hires a personality test to make sure they're customer-service material. Profiles International and Brainbench sell pre-employment tests for job candidates while PsychTest.com offers a free Customer Service Job Fit Test to help employees evaluate their own customer service skills.

Survey your customers

If you want to know how to grow your base of loyal customers, ask your current ones.

I recommend: Are your customers satisfied with your store? Give frequent customers a short questionnaire, similar to the sample Customer Satisfaction Survey from Survey Galaxy, to find out.

Respond to complaints

Customer complaints aren't business failures; instead, they're business opportunities. If you address and resolve conflicts promptly, the appreciative customer is in many cases more likely to be loyal than a customer who never had a complaint.

I recommend: Keep track of customer complaints with Entrepreneur.com's customer service form, which makes monitoring and responding to customer requests easy.

Increase communications

Constant communication with customers is necessary in building loyal relationships. Send regular mailings and e-mails announcing new merchandise, special discounts and exclusive sales.

I recommend: Supplement business communications with thank-you notes and birthday cards to give your customer relationships a personal dimension that's sure to inspire loyalty. Send professional e-cards with a CorpNote membership or for free at Blue Mountain. Prefer paper? Order business-themed greeting cards from CardsDirect.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Practicing sound business ethics in a climate of corporate scandals will go a long way toward building trust - and, therefore, loyalty - in your local community.
• •  A surefire way to increase loyalty is to offer your customers rewards, such as free merchandise or discounts, for shopping with you on a regular basis. A well-planned loyalty program will help you identify and compensate deserving patrons.
• •  Jumpstart customer loyalty by directing your advertising and marketing efforts at existing customers rather than new ones.

Making the most of customer loyalty programs should be a high priority for your business, if you have such a program in place. Whether you choose one of the small business loyalty programs or programs for large business offered by loyalty card program vendors, there are a number of things you can do to make the customer loyalty rewards unique to your business and profitable for you.

As it is with any new program, you and your staff need time to learn how loyalty incentive programs operate. You should receive adequate training from the customer loyalty program in day-to-day operations so you can reap the benefits of customer loyalty programs.

As more and more businesses set up their own loyalty programs, you need to make sure the customer loyalty program you chose continues to meet your needs. You should adjust your loyalty program so you can:

1. Retain your customers in your customer loyalty and rewards database.

2. Keep your customers returning to your business to buy more goods or services.

3. Continue to mine customer data from your customer loyalty database.

Action Steps
The best contacts and resources to help you get it done

Make sure your customer loyalty programs are easily accessible to customers

Set up displays showcasing your loyalty rewards programs near your checkout counter, as well as throughout the store. Also have staff available to help customers with the sign up process and to explain the benefits.

I recommend: GoEmerchant offers a large selection of marketing materials for loyalty incentive programs on its Profit Point website. Entertainment Publications can help you set up the right customer loyalty rewards for your business.

Electronically track data from your customer base in customer loyalty programs

Point-of-sale (POS) equipment can quickly and efficiently help you gather this data. Making the most of customer loyalty programs means tracking customer information so you can improve your business relationship and continue to build customer loyalty. It doesn't mean sharing this information with other businesses or using the information in an unethical manner.

I recommend: First Data point-of-sale terminals help you track customer loyalty and rewards trends within your business. It offers stationary machines as well as portable ones. TranSEND IT can customize your POS equipment for your customer loyalty program.

Hire consultants to help you make your customer loyalty rewards program more efficient

These loyalty program experts can help you with all phases of the rewards program, from start up to evaluation of materials. If you can't afford to hire full-time consultants to help you with your customer loyalty rewards programs, you hire they're help where you need it most.

I recommend: COLLOQUY offers consulting services to make sure you are making the most of customer loyalty programs. You can also get consulting services for your loyalty program from Bain & Company.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  To make the most of customer loyalty programs, create a newsletter designed for your customers. With customer's names in the database of the loyalty program, it's a simple matter to personalize the newsletter to each customer. As you write the newsletter, be sure to emphasize the importance of using your customer loyalty program.

Many businesses use customer relationship management (CRM) systems to maintain customer loyalty. If you are using CRM or any other type of customer loyalty program, you should have a good understanding of customer loyalty programs key terms. While some terms, such as customer service, are self-explanatory, others may not be so obvious. But once you fully understand the concepts that make a customer loyalty program successful it should be an easy task to implement the program.

Action Steps
The best contacts and resources to help you get it done

Customer loyalty management

By using customer feedback, you can set up a customer loyalty management system to help you retain your customers. If you actively work to make each customer feel as if he or she is receiving your undivided attention, you already have a good customer loyalty management system in place. If that's not your goal, you may want to re-evaluate how you handle customers so they remain loyal and continue to do business with your company.

I recommend: For further discussion of customer loyalty management, see the white paper from Walker Information.

Contact center or call center

Often the customer's connection to your business is through your contact center, also known as a call center. Your business can set up many ways to communicate with your customers. Whether it's through telephone service, email, newsletters, blogs or another emerging form of communication, the contact center should strive to maintain a positive image of the company.

I recommend: Avaya compares different styles of contact centers.

One-to-one marketing, or 1:1 marketing

One-to-one marketing refers to an individual approach to marketing in which you develop a plan designed to meet each customer's particular needs. The goal is to work toward building a business relationship first and then making sales. Businesses that use the 1:1 model often have high rates of customer retention.

I recommend: Read more about one-to-one marketing at Managing Change.

Customer life cycle

A customer life cycle is the relationship between a customer and your company over time. Examining the relationship in its totality can help you decide which products to recommend, how to market and cross-sell certain products, and how to best continue service after the sale. To maintain a customer life cycle, it's important that you maintain a positive environment for all the steps to occur.

I recommend: Jim Novo discusses the customer life cycle.

Retention

Retention should be the goal of all customer loyalty programs. It simply means keeping the customers you already have.

I recommend: BNET defines customer retention and the various techniques you can use to build customer loyalty.

Churn rate

Churn rate refers to the number of customers who choose not to do business with you. To find this number, take the number of people in your CRM program who no longer do business with you and divide it by the total number of customers in your CRM program. As you compare your churn rate over a period of time, you can measure your customers' satisfaction.

I recommend: Marketing research expert Gregory Kohs has an in-depth analysis of churn rates on his blog, Inside Market Research.