Leveraging loyalty programs to retain customers and drive sales: loyalty programs are a suitable option for companies seeking long-term customer relationships and continued sales increase rather than a mere boost in revenue for the short term.

Gone are the days of consumer loyalty out of necessity. Today's consumers don't need to shop from the local grocer, merchant or restaurateur simply because they don't have other options. With easy access to transportation and an interconnected world derived through technology, today's consumers have limitless options to research, compare and purchase. They are finding opportunities to save money and will make buying decisions based on their best interests and needs.

With the continuous evolution of technologies, businesses must stay abreast of the ever-changing ways consumers find, interact and purchase goods and services to successfully gain their loyalty amid today's heavy competition. By appropriately adapting, planning and executing a loyalty program within its marketing mix, a company can capitalize on the dynamic marketplace of today's consumer spending to reach the end goal in mind: retaining customers to drive sales.

A Look at Loyalty Programs Today

A well-implemented marketing strategy engages and retains customers, which can be achieved through effective loyalty programs. Loyalty programs are a suitable option for companies seeking long-term customer relationships and continued sales increase rather than a mere boost in revenue for the short term.

There are a number of different types of loyalty programs that are customizable to match the needs and goals of a company. A more traditional program is when customers sign up for their membership on location and receive a tangible membership card. A more recent campaign allows consumers to opt-in to receive offers and notifications via their mobile device. Although the more traditional loyalty program offers face-to-face engagement, the latter is much more relevant to current consumer behavior.

According to CTIA-The Wireless Association, "95 percent of text messages are read within three minutes of being received." By engaging consumers through their preferred medium, your company is much more likely to strike a chord with them, leading to greater engagement and brand awareness. With text messaging programs, companies are able to connect with customers while they are deciding where to purchase and how much they are willing to spend. Franchise businesses can also entice missing customers or those who haven't purchased from the company for a while to come back. Throughout any point of the day or purchase, a text message loyalty program is able to reach the people your company wants, when it wants to.

Building a Multi-Channel Loyalty Program with a Measurable Goal in Mind

Whether the goal is to drive sales during slow hours, increase the check average or retain customers and keep them coming back, campaign experts utilize a combination of today's technologies (email, text marketing, Facebook, Twitter, customer opt-ins and so on) to create more touch points with consumers. The simultaneous coordinated communication of multi-channels and technologies ensures businesses connect with customers even when they are not on the premises, but rather on their terms through their preferred medium.

For example, in 2011, East Coast Wings & Grill, a fast-growing casual-dining chicken wing concept, launched a loyalty program with three specific goals: build its customer database, increase customers' frequency of visits and increase spending and sales at all locations. With consumers able to participate in the loyalty program through a variety of ways, choosing the most convenient for them, the program was immediately successful, achieving each identified goal:

* Time Frame: 10 months

* Number of Participating Locations: 19

* Goal 1: Build a Customer Database: 63,000 signed up for the loyalty program, averaging 3,300 members per location

* Goal 2: Increase Customer Frequency: Loyalty members' average visits per month double in eight months.

* Goal 3: Boost Check Average: Loyalty members' average ticket was approximately 17 percent higher than non-loyalty customers, marking all-time record unit sales for the brand.

"Our research and development has uncovered that most patrons prefer a variety of options and opportunities available both face to face and through technology. With a handful of programs passed through various channels, we are able to keep things fresh and interactive for our customers," said Sam Ballas, CFE, CEO of East Coast Wings & Grill. "Not only did our rewards program surpass the goals we set, but it also implements tools that help track our customers' behavioral patterns, allowing us to create the right menu items and provide an excellent dining experience."

Simplicity is Key Element for Consumers" Engagement in Loyalty Programs

More often than not, your business will discover great results when a loyalty program is simple in terms of registering, qualifying for specific bonuses and redeeming acquired rewards. Consumers want a program that is hassle-free and provides immediate rewards for their brand devotion.

For example, by implementing a rewards program that required as little information as a phone number to register, Menchie's, a chain of self-serve frozen yogurt stores, launched one of the most successful rewards program in the QSR industry, leading to over five million loyalty visits.

"Our mission is to make every guest smile, and our mySmileage rewards program does that and more. We not only created a one-of-a-kind program, but by tying it into our philosophy, we took the program to a whole new level," said Amit Kleinberger, CEO of Menchie's Global Headquarters. "mySmileage has increased the frequency of visits of our guests, increased the average spending in our stores, enriched the Menchie's experience overall, and is spreading smiles worldwide. Within the first 12 months of the mySmileage rewards program, we reached an incredible 1.5 million members."

Messaging is Everything

The above examples point to a remarkable opportunity for brands and organizations to reach and retain customers; however, a campaign that is not pristine in its planning and execution may be detrimental. For example, email and mobile phones are both a very personal and private space to most users. Obviously, consumers don't want to be bombarded with what they may consider "spam;" therefore, it is vital that companies remain vigilant in their message and ensure that their efforts are not construed as commercial, irrelevant or not valuable.

A well-executed, loyalty program must have a strong foundation. Without research and planning, the message will be completely irrelevant and will be ignored by the consumer. Franchise systems want a program that is direct, effective and easy to enter and utilize by the customer. With technology today, organizations have many options with how they can successfully carry this task out.

Loyalty Programs Reflect Today's Consumer Behaviors Toward Technology

Customer loyalty has been around for decades and with the right program every organization can yield results. The type of program is relative to the type of industry, organization and even location.

Today's improved technologies enable loyalty programs to reach a larger audience in a quicker, more targeted and much more efficient manner. With the growth and constant innovation of email programs and the ever-changing boom of mobile devices, loyalty programs may now be carried out to attract and retain customers at any point throughout the purchase cycle.

Consumer behavior is rapidly changing alongside technology and companies must do the same to stay relevant in the customer's eyes. A loyalty program that is cohesive with consumers' behavior toward today's technology will allow a business to hold its place as a frontrunner among competitors alike by retaining customers and driving sales.

BY TOM EPSTEIN, CFE

Tom Epstein, CFE, is CEO and founder of Franchise Payments Network, an electronic payments processing company dedicated exclusively to helping franchisors and their franchisees improve system performance, increase revenue and reduce expenses. He can be reached at 866-420-4613, Ext. 1103 or tomepstein@ franchisepayments.net.