Loyalty Marketing – How it Works

Many retail businesses, such as restaurants and ice cream stores, have started loyalty marketing programs to increase the number of customer visits.  Rewards are utilized to motivate customers to come back.

One type of program utilizes a multi-functional POS terminal loaded with the rewards software and a state-of-the-art internet back end that records awarded points.  The software program can also store other information that allows businesses to track the patterns of customer spending and visits.

Rewards programs can produce substantial success in the restaurant business and many other retail type businesses, if they meet these four criteria: (1) Are they competitive? (2) Are they repetitive? (3) Is there enough margin to substantively reward customers? (4) Do the wait staff and service workers have time to do the transaction?

A loyalty program has to be right for your kind of business.  The convenience store, as an example, does not generally have enough margin to properly reward customers or the time to do the transaction.  But a sports bar can benefit from a rewards program.

In a program for IHOP, the pancake chain, a rewards program was set up to give one point for $1 spent, and the customers do not have to carry around a plastic card.  The diner uses his or her phone number, which the server inputs into the terminal, in lieu of a card, for points accumulation.  A card is required for redemptions to avoid fraud.

Loyalty marketers tell clients to “work your existing customer base” in other ways to  increase visits through incentives. For instance, you can query the rewards software system to find customers that have not recently come to your restaurant and incentivize them to come back.  Incentives are sent via E-mail or mailings. The aim is to maintain existing customers, increase customer frequency and attract new customers.

Some rewards system identify your best customers and can send them a thank you card or award.  The key to any rewards program is to acknowledge and incentivize the existing customer and to keep the program as simple as possible.


About Arlene

I am a journalist and marketing writer with a general business background. For more than 25 years, I have worked with professionals in health care, technology, law, financial services, and other disciplines to develop and write articles, web content, and marketing communications that represent their accomplishments and expertise. Currently based in South Florida, I can also be found in New York City, San Francisco, and Portland, Oregon, three locales where you can enjoy great food, meet fascinating people, and experience awesome scenery and urban sights.
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