Harnessing tech to improve customer service.

Tech Tools for Building Customer Loyalty

September 16, 2015 Tech4BusinessNow Article

Your customers want rewards. Technology can make it easy to give them what they want, and to build robust loyalty programs.

By Andrea Holved

Offering recognition and rewards to your repeat customers isn’t just a nice thing to do—it could be essential to your business.

A recent consumer survey conducted by Software Advice found that 66% of retail shoppers report they would be likely to stop shopping at a store that doesn’t recognize them as being frequent or loyal customers. Nielsen reports in its Global Survey of Loyalty Sentiment that 84% of shoppers who have a choice between a store with a loyalty program and a store without one will choose the store with the loyalty program.

Your customers want rewards. But the benefits of such a program don’t stop at getting customers in the door: If you use technology to your advantage, a rewards program can benefit your business by providing the detailed customer data that businesses otherwise have to pay market-research firms thousands of dollars for.

Turning that information into better promotions and higher revenue is easier than ever. Here are a few tech tools that will help you do it:

POS systems

“The easiest way to get the ball rolling on some sort of rewards program is through a point-of-sale system,” says Justin Guinn, the market researcher who conducted the Software Advice survey and authored its report.

Most modern point-of-sale (POS) systems offer customer relationship management (CRM) functionality, Guinn says, which tracks purchase histories and builds customer profiles using various identifiers: credit-card number, phone number, an email address—even a sensor that can detect the customer’s mobile phone.

Read more about mobile payment systems.

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Many POS systems also include loyalty software, which manages your rewards program for you and seamlessly links your customer profiles to their rewards.

“A CRM doesn’t necessarily do anything with the information that you’re collecting,” says Julie Titterington, the managing editor at Merchant Maverick, a Calif.-based company that independently reviews business software. “Loyalty software would help you act on any information that you have about your customers.”

If your POS system doesn’t include loyalty software, there are many standalone options that are designed to be integrated with existing payment systems, including e-commerce systems.

Loyalty networks

An offshoot of loyalty software is a loyalty network: a loyalty program that does all of the marketing and management for you, and for the hundreds of other businesses in the network.

Every loyalty network is different in its application: some issue rewards cards that a customer must swipe in order to accumulate points (and provide you with the iPad you need to do the swiping); some require customers to register their credit-card numbers, so their rewards can be tallied automatically when they pay with their card at an in-network store; some offer traditional rewards, like free drinks or discounts; some offer cash back.

All of them have an online portal or an app that allows customers to search for network businesses and track their rewards.

Loyalty networks tend to focus on independent businesses, and some—like Portland, Ore.-based Supportland or the Michigan-wide It’s My Michigan—are a network of strictly locally-owned businesses, appealing to loyal customers who want to support their local economy. For a fee, they’ll advertise your business to their members and provide you with detailed data about the customers who visit your store.

For businesses that want to offer their customers a state-of-the-art rewards program, but don’t want to spend much time implementing or marketing it, a loyalty network can be a win-win.\

Web forms and email marketing

David Yuengling, the president and CEO of Yuengling’s Ice Cream in Pennsylvania, faces an interesting problem: How can he reach his loyal customers, when they buy his product exclusively at third-party retailers?

A POS system wouldn’t help him, and neither would a loyalty network. So he’s asking customers to sign up on his website.

After giving their name, email address, mailing address, and birthday, a customer is added to the loyalty program, which Yuengling manages using the email marketing system Constant Contact. New members receive a free gift in the mail just for signing up, and an annual coupon for a free quart of ice cream during their birthday month. Yuengling also sends targeted email notices to nearby customers when a particular grocery store has a sale on his ice cream, which helps drive traffic to the store.

The strategy is about “making people aware of the customer loyalty program, and letting them know how to sign up, rather than trying to actually sign them up manually,” Yuengling says. At promotional events, his employees are equipped with cards to pass out to interested customers, explaining how to join the loyalty program. Also, the program is mentioned in the company’s advertising campaigns.

That’s an important part of any loyalty program, says Titterington.

“The marketing aspect of loyalty software is super important to its ultimate effectiveness,” she says. “If you’re going to have a loyalty program, you’re going to have to be able to do the legwork to promote it. People aren’t going to use it if they don’t know about it.”

This article was underwritten by HP: Introducing HP BusinessNow, the right technology to help your business grow.