Give your customer loyalty scheme a boost

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One of the keys to the success of any small business is how good it is at generating loyalty and repeat purchases from its existing customers ie. it’s customer loyalty or its customer retention.

In recent months, I have been conducting a series of interviews with authors and business leaders that are doing great things and helping businesses innovate, become more social and deliver better service. I’ve then been publishing them as podcasts and blog posts on my blog. You can check out the series here and I’ve also made them available on iTunes here too.

One such interview was with Phil Barden who has recently authored a book called ‘Decoded. The Science Behind Why We Buy’. In the book, he explores how advances in the last ten years in neuro, cognitive and behavioural science are fundamentally challenging our assumptions about how we make decisions and what that means for us in business and how we interact and deliver great service to our customers.

Now, you may be asking what this has to do with customer loyalty and customer retention.

Well, in the book he describes a situation involving customer loyalty cards where for no additional cost a very small change created a dramatic improvement in customer loyalty, retention and satisfaction.

If you have your own business or are a customer of a business that uses loyalty cards then you’re probably familiar with these:

So many coffee loyalty cards

Many businesses use this technique and for some it works well. However, in his book Phil explains an example of a business which experimented with its loyalty cards and introduced one that had more spaces than its regular card but had some pre-stamped the first two i.e.. regular cards had 8 spaces with no stamps and the new cards had 10 spaces with 2 pre-stamped. Objectively they are the same. But, they ran them together and the pre-stamped card created 70% more business than the other card.

What’s even more fascinating is that the people that went on to complete the pre-stamped cards rated the business as better and had higher satisfaction than the people that went on to complete the unstamped cards.

Why does this work? There are many theories and ideas of why the pre-stamped card works better including that we feel that we’re already started, that we’ve been gifted something, that we’re already part of something. However, the reasons behind why it works are not really that important. What is important is that it does work and the cost of implementing something like this in your business is virtually zero if you are already running a loyalty card scheme.

Do you have a loyalty card scheme in your business? Should you be changing it to include pre-stamped cards?

I think it’s worth trying if you want to give your customer loyalty programme a boost.

Photo Credit: Nick J Webb via Compfight cc

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