Loyalty marketing is an approach to marketing, based on strategic management, in which a company focuses on growing and retaining existing customers through incentives. Branding, product marketing and loyalty marketing all form part of the customer proposition – the subjective assessment by the customer of whether to purchase a brand or not based on the integrated combination of the value they receive from each of these marketing disciplines.[definitions: Wikipedia]
Simply speaking, what do you think about when you hear “incentives-based” marketing? Rewards, points, miles, cash back, coupons, offers, anything that has a perceived “reciprocal value”. For, example, many of us are all too familiar with the miles and rewards programs offered for decades now by the airline and credit card industries, or even retail giants and chain stores.
Loyalty Marketing for the Small Business – How can they effectively compete?
During each development era, from the agricultural period to industrialization and on to the technological advancements of today’s internet driven society, there have always been certain elements that defined the market at that given point in time. These elements and behaviors evolved as a corresponding reaction to a certain need. Today, we may refer to them as Trends.
Trends, not fads, are long-lasting indicators of cultural shifts. Example:
• Reading the newspaper for news (need: get the news);
• Listening to the radio for news (need: get the news in less time)
• Watching the news on the television (need: get the news, at my leisure, and be entertained)
• Internet browsing and assimilation of information and news (need: get the news, at my leisure, be entertained, and have wide cross-reference ability).
Nowadays, although specific market trends seem to be quickly changing to adopt to technological advances, if one were to observe the market place in its entirety, while considering how human nature interacts with such technological advances, one would find that there are two overall Trends that seem to continuously drive and define purchasing behavior.
1) Trend: Incentives Based Marketing
This trend keeps growing all around us. It’s the trend through which businesses reward their customers. Sales, special offers, bonuses, points, coupons, prizes, gift certificates, contests, heavy discounts, etc. are some examples of Incentives-Based Marketing. Sounds simple, doesn’t it? Dangerously though, improper implementation of variables, or mismanaged techniques used in Incentives-Based Marketing can lead to unintended price wars or discounts that “make or break the bank” of any small business. However, small business can certainly carve out its marketing advantage by first understanding and properly utilizing the second Trend.
2) Trend: Social Proof as a Measure of Complete Customer Satisfaction (CCS)
As social beings we communicate our experiences to each other all the time. Whatever feels right, good and pleasant to us we automatically recommend to each other. It is something that absolutely everyone has experienced and has acted on, at least once. And we truly mean everyone. Let’s us prove it:
Have you been on a pleasant holiday or enjoyed a fine dining experience at a great restaurant? What do you often do following your return from that holiday or that restaurant? Communicate how great the experience was and effortlessly recommend that same experience to the recipient of your message.
Why do we do that? Because it made us feel a certain way and we want to help people in our environment experience similar positive feelings. This is all heavily engraved at the primitive subconscious level. It is in our DNA. It is really a social survival instinct that cannot be ignored. This fact directly affects the market place.
This Trend, which is nothing more than the application of an existing need (the need to share a positive experience) established and reinforces the Social Proof (acceptance, credibility) of that small business owner who made that holiday pleasant, or that restaurant experience positively unforgettable.
This Trend, is the small business owner’s niche. How was the desired result achieved? If one were to really look and assess, the answer lies in the myriad of personal ways that business owner effectively engaged their customer (..but more on that later).
Remember, Trends are indicators of cultural shifts. Capitalizing on the trends takes a lot more understanding, proper engagement, fine-tuning, and the right tools and methods to yield a seemingly simple, yet effective result.