Small Business

Rewarding customers is crucial to success

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Many firms spend a lot of money advertising and networking to try to bring new customers through the door, but best practices say only 10 percent of sales should come from new customers. The other 90 percent should come from the firm’s existing customer base, which takes loyalty and trust – neither of which can be achieved with advertising.

To keep customers coming back, a business must be focused on meeting their needs.

So how do you build loyalty and keep existing customers coming back? A well-structured loyalty rewards program is a must. By this, I am not talking about the simple variety that says if you get your car washed 10 times, you get the 11th free. The key to an effective loyalty rewards program is rewarding customers with something they truly value.

For example, at the AMC theater in Tallahassee, there is a line in the concession area that only serves customers in their Stubs program. This line is always shorter and quicker than the other lines, thus rewarding their loyal customers with something everyone values: speedier service and less time spent waiting in line.

Likewise, an HVAC dealer puts customers who have purchased an air-conditioning system from them on a priority list so they get service ahead of others needing repair work. Furthermore, they offer free labor on emergency repairs for customers who have their systems checked by them every year.

Then there is Delta Airlines, which rewards its loyalty-program members with free checked bags, priority boarding and baggage priority. With these perks, Delta’s loyal customers are able to get on the plane first, find a place for their bags in the storage compartments and get settled before other passengers board. Then, their luggage comes off the plane first, so they can retrieve it before the majority of other passengers.

What is important to note about these rewards: There is virtually no cost to the company but it is invaluable to the customer. These perks build loyalty and trust, and because they are inexpensive to offer, even small businesses can offer rewards that have tremendous value to their customers.

For example:

I was dealing with a very small assembly business. Employees there found that if they could guarantee two-day turnaround for their most loyal customers, it would make a difference. And it did.

Then there was a restaurant that offered reservations only to its loyal customers. The customers who were rewards-program members loved that perk, and the exclusivity made others want to belong.

Now go out and identify services you can offer your loyal customers that do not cost much but bring tremendous value. When you do, you will build and reward loyalty, which will turn your customers into raving fans.

Jerry Osteryoung, a business consultant and Jim Moran professor of entrepreneurship (emeritus) and professor of finance (emeritus) at Florida State University, can be reached at