Automated loyalty programs have become a standard offering for large customer-facing businesses. For example, online retailer Amazon offers a variety of programs such as Amazon Prime, which offers expedited free shipping and other perks for paying members, and most major supermarket and drugstore chains have some kind of card-based program where shoppers receive targeted discounts and earn credits toward future purchases.

December 1, 2011

2 Min Read
SMBs Look for Loyalty Programs; Will MSPs Deliver?

By Dan Berthiaume

Customer Loyalty

Automated loyalty programs have become a standard offering for large customer-facing businesses. For example, online retailer Amazon offers a variety of programs such as Amazon Prime, which offers expedited free shipping and other perks for paying members, and most major supermarket and drugstore chains have some kind of card-based program where shoppers receive targeted discounts and earn credits toward future purchases.

However, customer loyalty is just as, and probably more, important for SMBs. Indeed, SMBs already face significant pressures on pricing, product selection, and convenience that are largely caused by their larger competitors, and each individual repeat customer is more crucial to an SMB than to a large enterprise.

A recent Boston Globe blog post recommended that SMBs start offering loyalty programs, and the idea makes a lot of sense. However, loyalty programs require technical expertise and employee training that many SMBs do not have the internal resources, knowledge or time to deliver. Following are recommendations of a few key ways MSPs can step in to help SMBs design, launch and maintain loyalty programs.

Targeting the Individual

A true loyalty program goes beyond simply identifying regular customers and giving them a discount. The most effective loyalty programs target individual customers through methods such as providing specific discounts, cross- and up-sells based on their previous shopping behavior. This kind of customer segmentation requires the usage of advanced algorithmic solutions which are expensive and cumbersome to install and run. MSPs can take the burden of managing these solutions off the shoulders of their SMB clients while still allowing them to take advantage of their capabilities.

Tiering Rewards

A tiered reward system is not as individualized as the customer segmentation system described above, but just as important to a successful loyalty program. Not all customers are created equal. Customers who frequently patronize a business or spend a large amount of money are worth more, and should receive more benefits.

A tiered reward system classifies customers into general categories of reward based on how much value they deliver, and also provides incentive for less valuable customers to increase their contributions. The Boston Globe blog gives the example of a local hiking business with a “Frequent Hiking Program” that allows customers to bank dollar amounts based on the number and length of hiking trips they take. For example, a one-week trip would bank $100 to use for another trip in the future.  More than 44% of the company’s business comes from repeat customers.

Train, Train, Train

For service businesses such as restaurants, the blog recommends training staff to provide superior customer service to every customer, every time, turning the experience itself into a form of customer reward.

However, managing training and assessment can be difficult, especially for already overworked management of a small business. MSPs can automate much of the training and assessment, serving as the “eyes and ears” of SMBs who need to ensure a top-notch customer experience.

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