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I'm thinking of introducing a loyalty card scheme. Any advice?

20 July 2006
I'm thinking of introducing a loyalty card scheme. Any advice? Guy Holmes, The Restaurant Ingredient Loyalty card schemes are a good way of enticing customers to return and more frequently. Here are four main points to remember: Build your customer database. A loyalty scheme is a great way to do this. The best way is to present customers with a small form for them to enter a few details with a loyalty card attached. But use the information wisely - overuse of a database can result in people asking to be taken off. Make it a good deal The better the deal, the more likely and more often people are likely to use it. For added value, try organising a joint venture with neighbouring businesses. For example, loyalty card members could also get discounts at the local gym, beauty salon, florist, etc, and any business that accepts your loyalty card for discounts would also give their existing customers the form and loyalty card as well. The beauty of this kind of promotion is that everyone benefits: your restaurant and the marketing partners reach new customers, and the customers get special discounts. Time limitations. It's always best to run special offers for a limited time only, such as three months, then change the offering. For example, for a three-month period loyalty card holders would be entitled to a bottle of house wine when ordering two main courses. Three months later this could be changed to a discount of 15-20% off the total bill. This ensures that people act on it sooner rather than later. Target new customers as well as old. Include loyalty card information on your website with an online form and post the card to applicants. You could also do a mail-shot to local residents and businesses that includes the loyalty card. www.tri.eu.com](http://www.tri.eu.com) Ann Elliott, Elliott Independent A loyalty card scheme needs a lot of consideration. The areas to think about are: Objectives. What do you want to achieve with a loyalty scheme? New customers? Return visits from existing customers? A database? Current offering. Are you thinking about a loyalty scheme because sales are in decline? If so, is your offering meeting your customers' needs and expectations? Target audience. Who do you want to become loyal? Everyone? Families? Measurement. How will you measure success? Who will collect and analyse data? Options. Are there other ways to achieve your objectives? Payback. What return on your investment are you looking for? Over what time period? Mechanic. Do you want your customers to "join" a scheme? If so, how will this work? Or is a simple collector scheme more appropriate? Scheme. What sort of offer do you want to make to your customers, eg, become a "member" and receive 10% off your bill? Or buy five main meals and get the sixth free? Timing. How long do you want the scheme to last? You should reserve the right to close it at any time. Do you want it to be relevant to any particular trading time? Redemption. When do you want customers to redeem their "prize" for loyalty? Data collection. Do you want to build a database? If so, remember customers have to opt in. You can't simply hold their details on file. Any database, to be relevant, must be checked and cleaned regularly. Fraud. Can your employees use the scheme fraudulently? Take time to think. Loyalty schemes are difficult to stop once started. [www.elliottindependent.com](http://www.elliottindependent.com) Ian Graham, Hotel Solutions Partnership I was on the team that brought Holiday Inn's loyalty card "Priority Card" into the international arena. What I learnt from those days and subsequently is that you need to be sure what business challenge you're seeking to remedy. Loyalty programmes can (a) keep customers from defecting, (b) increase average spend, (c) prompt customers to make additional purchases, and (d) yield insight into customer behaviour. It's unlikely that a scheme can be made to fit all four well, so which attribute are you focused on? The design has to be attractive to customers and not too expensive. There are several issues to think about: - Getting the levels of reward right. If I need five stays to gain a reward, why would I stay for 10 to gain a different reward? - The slow initial period of points-gathering when the customer is a long way off gaining a reward. Perhaps a little earned inducement or signing-on bonus will encourage the customer to have an early sense of momentum. - The nature of the reward. It should be a treat or pleasure rather than being utilitarian. Not only will be this be better received, but your business will be perceived more positively. - It's all too easy to give an extra night's stay after the guest has stayed with you for 10 nights, but it doesn't help you to develop the relationship. It's better to offer the guest an experience with a product element that they may not have yet bought. Finally, you must ensure your loyalty scheme doesn't: - Reward the disloyal. - Reward volume over profitability. - Promise service elements that you can't deliver. [www.hotelsolutionspartnership.com
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