Customer rewards programs are serious business

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Customer-loyalty schemes have probably been around forever. I grew up with the S&H Green Stamps program — remember that one? Participating retailers rewarded customers with stamps that we carefully pasted into booklets. When we got enough booklets filled, we traded them in at a redemption center for a variety of goodies.

But much credit for the modern-day rewards programs should probably go to Robert Crandall, who was chairman of American Airlines and introduced the first frequent-flier program (AAdvantage) in 1981. In essence, what Crandall did was change American culture from thinking about selling tickets to thinking about relating to the various customers that opted to fly on American.

Today, building customer loyalty might be more important to boat dealers than ever before. While we’re seeing positive signs of a turnaround for our industry this year, there’s no question the economy for us still sucks. Growth, then, can only come from two sources: acquiring new customers (increasing market share) or getting existing customers to buy more and buy more often. Ideally, it’s some of both. But we know acquiring new customers is invariably expensive. Conversely, it’s much cheaper to get more business from existing customers. That’s where loyalty rewards programs come in.

Good loyalty programs are purposefully designed and executed business plans. They’re really orchestrated marketing efforts to retain customers and increase their shopping frequency and dollar value. The programs can take many forms, from single-level plans (all members receive the same benefits) to tiered programs where the most profitable customers are elevated to a higher member level with distinctly larger rewards and benefits. Nordstrom's Fashion Rewards program is a good example. When customers make purchases, "rewards points" accrue for each dollar spent. When points reach 2,000, Nordstrom automatically mails the customer $20 in "Nordstrom Notes" that can be applied to future purchases. But depending on how much they spend annually, higher Fashion Rewards members also have access to perks such as concierge service and free alterations.

One I really admire is a loyalty program with a different twist by the San Francisco Giants. Giants vice president of customer relations Russ Stanley recently told Inc magazine that the organization assigns to each season-ticket holder a specific team representative to make certain the fan is happy with their experience at the ballpark. "We give them the name, phone number and e-mail address of a real person who is responsible to them," explains Stanley. "We deal with problems immediately. If a person says they had trouble with a ticket that didn't scan at the entrance and they missed an inning or two, I give them an invitation to another game."

In the end, loyalty programs like the Giants’ are really meant to build solid and engaging relationships with customers. They play on the fact that we’re all social beings who like to be recognized. Loyalty programs, when done right, enable us to connect on a more personal and rewarding level with our customers.

There’s a lot more to this subject. If you’re attending IBEX in Louisville next Tuesday-Thursday (Oct. 2-4) please join Boston-area dealer Larry Russo (Russo Marine) and myself when we present a special seminar (Tuesday at 1:30 p.m.) on “Building a Successful Customer Loyalty Program.” It’s still not too late to register at: www.ibexshow.com. Hope to see you there.

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