Loyalty beyond the punch card

The following is a guest post by David Rosen.

This is the beginning of our blog series on loyalty for SMBs. We spend a tremendous amount of time with owners of small to medium sized businesses – restaurants, pharmacies, retailers – discussing how to build loyalty. One of their most basic challenges, hard as it may be to believe, is still just moving beyond the punch card.

Think about the number of businesses that keep track of customer relationships on a piece paper. If you’re like me, you have 2-4 punch cards in your wallet, but what was their original purpose? Are SMBs just giving away that 8^th cup of coffee, that 12^th free frozen yogurt, that discount their 10^thpurchased beauty product, or are they actually changing behavior, driving another purchase, and shifting share away from the competition?

Sure, the punch card system provides a marginal reminder in your customers’ pocket, is a nice thing to do for them, might even get the loyal ones to return, and is certainly easy to understand. But now that SMBs are finally moving beyond these frayed relics, it’s important for us to recognize what they failed to deliver in order to avoid the same mistakes.

Punch cards offer no level of CRM. There is zero ability to dynamically change people’s behavior because they are so static. Further, their whole medium is incredibly stale, and they get lost in the purse or wallet. And let’s not forget the big customer care issues of combining punches, or heaven forbid, lost cards.

We admit it – we like the ease of punch cards, but these days it’s also easy to go electronic, and vital to move in to the 21^st century. SMBs need to shift the identifier to the card swipe of a registered card, or minimum a phone number or email address look up.

Also what’s invaluable are the baseline capabilities of CRM – to identify people who have lapsed, promote products or offers, and target individuals. SMBs need to ability to accelerate the rewards and use them to change behaviors, e.g. for a mid-week pizza or afternoon coffee purchase.

We are not talking about full CRM of purchase analysis at the product of category level. SMBs can maintain simplicity in their loyalty programs, eliminate the customer services issues and add basic CRM capabilities through a burgeoning number of coalition, location based and mobile marketing solutions.

For many businesses, moving beyond punch cards represents the gateway to a more sophisticated customer loyalty management (CLM) program. The options are affordable, easy to implement, and with trusted players in the space, don’t have to be daunting.

Stay tuned for:

• Do coalitions make sense for SMBs?
• Mobile loyalty’s leap forward and the opportunity for SMBs
• What role do game mechanics have in SMB loyalty?

David Rosen is recognized as one of the top Loyalty Marketing strategists in the United States. David’s strengths combine the strong analytic and customer insight strengths developed as a partner of Oliver Wyman (previously Mercer Management Consulting) with the hands-on management of MyPoints’ industry-leading consumer shopping loyalty program and senior strategy and business development roles at Loyalty Lab.

This post first appeared on the Loyalty Lab blog and has been lightly edited.