Why Launching a Customer Loyalty Program is Worth the Gamble

What type of small business do you own? A coffee shop? A burger joint? A small boutique?

Let’s say you own a small wine shop. Think about all the other places that your customers can buy wine. Depending on what state you live in, they might be able to get it at the grocery store or drug store. They could go to the big wine depot stores. They could order it online. They could buy it from another small wine shop.

Given that your customers can get what you sell lots of other places, how do you attract, and retain, a loyal contingent of customers that only come to you for what they need?

Well, assuming all other factors (inventory, price, etc.) are the same, you have to create a differentiator for your business – something aside from what you sell or offer that makes all of your customers loyal customers. One way to do it is a robust customer loyalty program.

The Gold Standard

One of the biggest names in customer loyalty is Harrah’s Casino (now part of the larger Caesars Entertainment Group). While on a different scale (and in a different industry) than your small wine shop, their principles of customer loyalty can be easily translated to work for you.

But times weren’t always so good for Harrah’s. Let’s take a look back.

Between 2000 and 2010, several luxury casinos were built in Las Vegas, most notably the Bellagio (cost: $1.6 billion) and the Wynn (cost: $2.7 billion). These properties had the resources to create a luxury experience for every guest, and to bring in big name chefs for their restaurants. Harrah’s (which only cost a paltry $315 million to build back in 1973) simply could not compete with the amenities of these new luxury casinos.

Amenities aside, the games at every casino are the same. So what causes customers to spend more money at one place versus another? Customers must be loyal to one casino or another for reasons outside of the gaming.

So, what was Harrah’s to do? They couldn’t start from scratch to renovate their building or add fancy restaurants. They had to work with what they had.

So, they began measuring the overall Harrah’s customer experience to figure out the key drivers of customer loyalty. They rewarded property management and staff for creating exemplary customer experiences, and began tracking the spending of their customers. Then, they identified and ranked their most profitable customers and learned about their likes and dislikes. They made sure these top spenders never had to wait for service. They gave them free tickets to shows, special reservations at hot restaurants, and they even comped their rooms once in awhile.

Soon, Harrah’s had become the Gold Standard for customer loyalty programs in the casino industry. Today, the Total Rewards Program earns Caesars Entertainment $6.4 billion per year from over 10 million members across 40 properties.

Making it Work For You

Now, what does that mean for you and your wine shop?

Well, since your customers can get your product lots of other places, you have to figure out a way to work with what you’ve got – and make your store the only place they want to go.

A few questions to get you started:

What can you offer your employees for providing exceptional care to customers? Cash? A free bottle of wine? An extra day off?

Who are your “best” customers? The ones who spend the most and come in often? What can you offer them? Exclusive access to special shipments? Private events in the store? A higher-than-average case discount?

Then, once you figure out how to reward them – how can you get them to spread the word about your business so that other people come in to shop? In exchange for an online review or post, could you offer them a special discount or freebie?

For even more tips on how to create loyal customers at your small business, join LSMGuide today to access our full Customer Loyalty Guide!