There’s no question that customer loyalty programs are a great way to build retail and restaurant business. But while the innate appeal of these programs plays some role in their success, the most effective programs are built on a more strategic framework.

In order for a customer loyalty program to be truly effective, it must be targeted to your best customers. Contrary to what you may assume, these shoppers aren’t necessarily the ones who frequent your store or restaurant most often.  For example, in many instances the most regular visitors to retail stores come primarily or almost entirely in search of “bargains”, seldom pay full price and often return their purchases.  These aren’t the “preferred” customers around whom loyalty programs should be geared. That honor goes to shoppers or diners who may come in less frequently, but spend more.  Rewards, too, must be geared toward these best customers. After identifying them by reviewing reports from your point of sale system, examine their buying habits and structure rewards accordingly. For added appeal, you may even want to customize rewards to jive with patrons’ preferences. For example, you might offer a customer who regularly purchases perfume from your store a “bounce-back” coupon redeemable for a discount on bath powder in the same fragrance. You’ll get better results by doing this than, say, making the coupon good for a discount on aftershave.

Just as importantly, ensure that your best customers—those to whom the loyalty program is targeted—can easily take advantage of it. Allow them the convenience of giving their telephone or cell phone number, rather than presenting a membership card, to avail themselves of such rewards as immediate discounts on selected items and “bounce-back” coupons, as well as to accrue points for their purchases on the spot. Remind customers of the “perks” that come with their rewards cards. Presenting them with a discount? Ask store associates or servers to describe the savings, even if that discount amount is indicated on a receipt. Notifying program members of points accrued as they pay for their purchases or settle the check? Instruct staff to mention how many additional points are needed to collect a reward. Quite possibly, a customer who’s close to the mark may decide to make another purchase or order extra food to collect that prize a bit earlier.

But that’s not all. Don’t just engage in a blitz to sign up loyalty program members, then sit back after the initial enrollment frenzy dies down. Continue to reward staff for attracting new participants. Hold occasional special events for members. Send mailings (email or traditional paper ones) to let members know when new merchandise has arrived or when you’re running special “members-only” sales and dining promotions.

If all of this seems like a lot of work, remember that it is far more costly to cultivate new customers than to retain old ones. To find out how best to structure a loyalty program for your store or restaurant—including ways to bring social networking into the mix—contact pcAmerica.