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The
tracking could include number of visits, amount of purchases over a
period of
time or a combination of these or other measurable concepts. There are
many
different ways to offer a loyalty program with the simplest being a
punch card.
You can also use proofs of purchase, peel-off cards, scratch-off cards,
receipts, gift cards, loyalty cards, etc.
Loyalty
programs can be as simple as a “buy 10 pizza buffets get one free” that
some
local Pizza Hut franchises use to increase lunch business. They add to
this by
offering a double punch on Mondays bringing in additional lunch
business on a
typically slow day. Loyalty programs can be as sophisticated as you
acting as a
partner with hotels, airlines and movie theaters. Here’s PMQ’s
explanation of
different types of loyalty programs and how to use them in your
business.
Reward
loyalty. Focus your marketing energies and dollars on building loyalty
with
your existing customers. Statistics find that it may cost you as much
as ten
times more in obtaining a new customer than to retain an existing one.
Continually couponing and deep discounting create loyalty, but the
customer is
inadvertently tied to the discount rather than to the service or
product. For
the best results, your incentives should entice customers to spend more
and
spend often.
Craig
Douglas, owner of Pizza Joe’s in
Craig
already has a great customer rewards program in place. “We call it
‘Free Food
Fridays,’” Craig says. “We randomly pick one of our customers and call
them on
Friday afternoon to tell them they’ve been selected to receive $15 in
free
food. We tell them to contact two friends or neighbors for the same
deal. We’ve
gotten many new and regular customers. It rewards our customers and
gets them
talking about our pizza with their neighbors.”
PUNCH CARDS
PMQ
Think-Tanker Phil Evans, owner of Pizza Serena in
“Because
I
punch the cards in increments, $12 is one punch, just like $15 is only
one
punch. The average completed card has ‘generated’ close to $75 or $80
in sales.
For that I give away a free 10-inch pizza. I staple all the completed
cards
above my counter. This shows customers that people really do get free
stuff. I
will never stop using this marketing tool!”
Incremental
punch cards provide customers with instant gratification. Wondering how
to
develop an incremental card? Here’s an example of what your offers
should look
like:
- First visit—Get the card.
- Second visit—10 percent
discount.
- Third visit—15 percent
discount.
Designate
a
stopping point and reward them with 50 percent off or a free pizza.
A
free-for-you spin-off of the punch card is collecting proofs of
purchase. Scott
Anthony, owner of Fox’s Pizza Den in
- One Proof – Fox’s Pen
- Two Proofs—Fox’s Softer
Saucer
- Three Proofs—Fox’s Memo
Board
- Four Proofs—Fox’s Travel
Mug
- Five Proofs—Fox’s T-Shirt
- 20 Proofs—Big Daddy Pizza
SCRATCH-OFF CARDS
Big Dave
used scratch off cards in his pizzeria. He says they were very
effective,
especially for delivery. His only tip: make sure drivers have the
prizes like
soda in their cars for instant winners.
SWIPE LOYALTY CARDS
Another
type of loyalty card can be used in much the same way as a gift card,
often
times through your POS system or credit card terminal. These come in
several
shapes and sizes ranging from a bar-coded key tag to the traditional
wallet-sized plastic card. Here’s a quick explanation of each type of
swipe
card loyalty program. The swipe card operates on a points system. Each
purchase
a customer makes gives them a number of points which will accrue and
may be
redeemed for merchandise, cash, rebates or free food.
INSTANT
REWARD
Cardholders
automatically receive a reward when they reach a certain number of
points. They
can get rewards like free pizza, a discount, or free merchandise such
as key
chains or hats.
You
can
also add cash rebates to the card. This means that cash value is stored
on the
card instantly when the customer obtains a certain number of points.
When the
customer is ready to use their reward, the loyalty card acts as a gift
card.
The customer pays with the cash accumulated on their loyalty card.
Printed
vouchers are another type of instant reward. These are given to
customers once
they’ve reached a specified number of points. Their reward prints on
the
receipt. The printed voucher is a great way to cross-market with other
businesses. The voucher program might work where the pizza guy wants to
start a
program with a complimentary but non-competing business in the
community. Maybe
there’s a movie theatre across the street, or a bookstore, and it can
automatically print out a voucher that says, “Congratulations you get
two
tickets to a movie at (local) Theater.” You can put exclusions on the
voucher
like “Not valid for Friday nights.”
GRADUATED REWARD
The
graduated customer reward program allows customers to save points until
they
want to cash them in. Reward points are only subtracted when the
customer wants
to use them. A popular variation of this program is the rebate program.
We live
in an instant gratification society; customers don’t want to wait. If
someone
walks into your store and spends $20, the system will take say 10
percent of
that and put it back on their card as cash. The customer gets two
dollars back
on the card as cash. It can continue accruing. They can opt to use it
right
away let it accrue to something more significant.
OTHER LOYALTY PROGRAMS
Achievement
Awards for Kids—Partner with teachers and schools. If the kid gets an
A, the
teacher will give them a certificate that says, “Hey, you’ve done
exceptional
work.” The teacher signs it, and the kid gets a free meal. Who’s going
to take
the kid to the restaurant but the parents? They’re going to eat as
well. It’s a
great reward for the kids and special recognition creates loyalty. You
may also
want to partner with churches and soccer or baseball leagues. Give
achievement
awards to kids who learn Bible verses. Film soccer or baseball games
and invite
the team back to your shop to see it. Put up pictures of kids who
excelled in
school or activities.
Birthday Club—Send a postcard with a
loyalty card
attached to your customers on their birthday. Put more than one offer
on it.
The customer will hang onto it for a month or two after their birthday.
Check
out PMQ’s previous coverage of this type of program at http://www.pmq.com/mag/2002fall/
games.shtml.
Beer Club—Old Chicago Pizza, has
had a beer
club loyalty program in place for over 20 years. They developed the
World Beer
Tour in the mid-80s. The tour features 110 beers from around the world.
Customers are given incentives to try each beer. The tour is free and
customers
are not required to finish it. Customers are given prizes as they reach
certain
milestones on the tour.
Old
This
program also allows the company to have a high volume of beer sales.
Sixty
percent of Old Chicago’s beverage sales are beer. This marks an average
of 38
to 45 percent of total store sales.
TRACKING CUSTOMER SALES
USING
LOYALTY PROGRAMS
When you
look at your options for tracking customer purchases through a loyalty
program,
you have a few available. You can use an outside company that tracks
the
purchases on your swipe cards. You can use your POS system loyalty
program
module to track purchases or you can track using your database.
The
most
important thing to do when beginning your loyalty program is to get
your
customers to fill out an application. Things you should obtain are
birthday,
zip code, email address and even anniversary dates because your
marketing is
tied to this demographic information.
You
can do
your own swipe cards with your POS. The cards are pre-coded with a
number,
which your POS will use as their account number. But, that it is often
easier
for pizza places that deliver to use their customer’s phone numbers as
an
account number because the caller ID is often linked to the POS. A big
plus of
using your POS to track customer loyalty is that you can track numerous
promotions.
If
you do
have a POS system, but don’t have the capability to track customer
loyalty
programs or you don’t have a POS, an outside tracking company may be
your best
bet. Seventy-five percent of the time the company’s software is
compatible with
either the POS system or the credit card processing equipment. The
company can
track the purchases, points, birthdays, etc. and reveal who your best
customers
are.
CONCLUSION
Keep in
mind that whatever type of incentive program that you develop, you do
not have
to have the cheapest pizza in town to gain and keep customers. Instead,
focus
on what makes you stand apart from your competition: your staff, speed,
value,
cost and service. As a result, your customers will feel more loyal to
your
excellent service than to your discount offers. Your goal as a pizzeria
owner
is to maintain the customer’s confidence in your product. You don’t
want to tie
them to the offer. Loyalty programs are just a way to say “thank you”
for
choosing your product not your discount.
– PMQ –