I wish I had known that actively engaging in my brands loyalty programme would build sales.

Most franchise brands have a loyalty program and these programs always require the franchisee to give away something.  As a franchisee I was always concerned about how the cost of the give away product would impact my bottom line – my profit.  After all the franchisor was already getting a fair chunk of my turnover in royalties and now they expected me to give away more product as well.  Unbelievable!  But this all changed when I realised how participation in the loyalty program actually built my sales.  I will give you three ways that it brought the customer to my store over others.

I could speak directly with my customers

It gave me a database of customers that I could communicate with on a regular basis.  I could announce new marketing campaigns.  I would announce special offers, which really were just an upsell direct to my customers on quiet days.  For example on Mondays and Tuesdays I would have $2 drinks with each sandwich sold and have that circulated to my loyalty database at around 11am which was just when they were thinking of lunch.

My customers came back more often

My team were trained to ask for the loyalty card each time and when the customer had earned the free reward, the warm and fuzzy that the customer felt can only be good for your brand.  AND it made them want to give over the loyalty card every time.  In fact, I had customers who could tell me they were nearly ready for their free sandwich.  I even had the sneaky office junior who would come to me to get all the office lunches so that she could have a free sandwich.  Gen Y… gotta love ‘em!

I had my brand in their wallet

The most valuable part of promoting your loyalty programme is that you place a little advertisement in the wallet of the customer right beside their EFT card.  When they are thinking of buying they open their wallet and wallah!  There is your brand front and centre – very valuable real estate indeed.  The thought process is immediate.  Hmmm…. actually I do want a sandwich and to your store they go.  Magic!

So let’s do the math.  Does giving the reward gain you money or eat into your profit?

If you give a point every time your customer buys a sandwich worth $8 and you reward after 10 sandwiches, you have to sell $80 worth of sandwiches before there is any cost to you.  The cost of the giveaway sandwich at a COGS rate of 30% is just $2.40.  So for your $80 worth of sales you are really only giving away $2.40.  That’s a return on investment I like.  If I could just put down $2.40 and get $80 in return I would do it everyday.  Much cheaper than any advertising campaign I can think of.

So it’s not rocket science, offering a loyalty card does bring more sales to your store but you must do two things

  • Have a process in place to offer it each and every time
  • Gladly offer the reward when it is due

So from my experience, the surprise and delight factor your customer receives and the potential revenue it generates outweighs any costs in implementing the program.

Elizabeth GillamElizabeth Gillam founder and CEO of Franchisee Success creates High Performance Franchisees. Having owned and operated three franchised food businesses; Boost, Healthy Habits and Bucking Bull; she knows what it takes to operate a profitable food franchise. In her recent book, Upsize your PROFIT – 6 steps to running a profitable food franchise she outlines how franchisees can ACE their franchised business unit.

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