Loyalty Programs Add a Twist to SMB Marketing

June 10, 2016 Peter Krasilovsky

The old paper loyalty punch-cards have been widely upgraded to electronic loyalty programs. Taking off from the success of the Starbucks Gold loyalty program, a large number of  these programs are now in the marketplace, including such national brands as Belly, FiveStars, Perka and Fishbowl, as well as many white label products.  All tend to complement other promotional efforts, such as digital coupons and prepaid deals.

Most loyalty programs not only reward returning customers with free items after a certain number of visits and/or spending, but they also help SMBs recognize customers, and to  take the personalized data from transactions to  spur further engagement with customers via immediate feedback and reviews.   The goal, clearly, is to make the SMB engagement with customers more like "Cheers" than "Minority Report."

An additional advantage of electronic loyalty programs is that the data can be used by SMBs to plan their marketing efforts.  For instance, SMBs can use the loyalty data to determine which advertising and promotions efforts have proven to be most effective.

There are, obviously,  costs associated with loyalty programs.  They also take time to support.  Moreover, some of the same “big data” might be achieved through other means, such as coupon redemption, mobile in-store programs such as Beacons or Wallets,  or Point of Sales programs that have loyalty components.

The big question, then,  is whether they not only result in “loyalty,” but  more incremental spending by customers. Some companies have set a goal to gauge the success of their loyalty efforts.  Whole Foods, for instance,  says it will find its Whole Foods Loyalty 360 program successful if it boosts sales by 10 percent.

About the Author

Peter Krasilovsky runs Local Onliner, a consulting firm that focuses on how digital channels target local consumers. “Local” has been a focus for him since 1995-96, and the firm's practice now includes search, marketplaces, geotargeting, vertical media and loyalty and promotion services. Peter was Chief Analyst and Vice President for BIA/Kelsey from 2006-2015. He holds an MA from The Annenberg School of Communications at The University of Southern California and a BA from Sarah Lawrence College in Bronxville, NY. He currently resides with his wife Sharon in Ashland, Oregon.

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