5 ways franchisors can boost customer loyalty

By Nick Hall | 22 Jul 2019 View comments

Franchising, and indeed small business in general is highly dependent on returning customer trade. While some franchisors have been quick to implement customer loyalty programs, often to great success, there are alternative methods for generating loyalty.

The strategy behind a customer loyalty program is simple; offer a range of incentives to increase returning trade.

For larger franchise chains with strong representation across the country such as Chatime, the model has worked well. However, the roll-out, implementation, offering and value can be an expensive and complicated mix for franchisees to contend with.

A perpetually dissatisfied franchisee may view the introduction of a customer loyalty program as a threat to their underlying profit margin. As a result, it can be hard to get the mum and dad operator on-board initially.

Michael Barnard, general manager of customer lifecycle management specialist,  Customology believes there are several other strategies that franchisors can implement to generate interest outside of a loyalty program.

“A big challenge for a lot of programs is that many of them are geared to actually not reward the customers who are most loyal,” Barnard said.

“They’re used as a hook to get people in, but then you actually get less benefits the longer you are loyal to the brand, which essentially defeats the purpose of rewarding loyalty.”

For franchisors looking to capture returning trade without implementing a customer loyalty program, Customology suggest there are five key areas to focus on.

1. Customer experience

Understanding the contemporary landscape in which your franchise business operates in is critical to cultivating customer loyalty.

This means refining the customer experience to best suit the evolving needs of your target clientele.

“Customers today have endless choices, if they receive a poor experience it’s easy for them to switch brands – and for them to tell others,” Barnard said.

“Deliver an outstanding customer experience and they won’t have a reason to look elsewhere.”

2. Capture data

Customer profiling is by no means a new notion, however many franchise chains have yet to take advantage of the latest data capturing platforms.

The more data your individual franchise units are able to collect, the more detailed your demographic research can be.

From here, franchisors can utilise the profiling data to establish age, affluence and demand to not only generate customer loyalty, but more effectively territory plan.

“The more times a customer shops with you, the more data you are able to collect, helping you to get to know the customer better,” Barnard said.

3. Generate customer profiles

A big part of understanding your customers’ needs is understanding your customers and where in the lifecycle they sit.

Information such as how many times they have transacted and what payment methods they most frequently use give a detailed understanding of their customer profile.

Barnard suggested franchisors focus on understanding their customers’ behaviour, before they attempt to influence it.

“This may be as simple as knowledgeable staff members explaining/demonstrating products and offering tips and advice to help the customer. Empathise with the customer, be responsive, support them every way you possibly can,” he said.

4. Implement a path to repurchase strategy

Often franchise chains can come a cropper by treating email addresses and phone numbers as an infinite marketing tool.

In order to generate interest and encourage returning trade, franchisors must implement a targeted and relevant communications strategy. Remember, it’s a fine line between targeted and tiresome. Send too many emails and the customer may be turned off, send too little and then customer may go looking elsewhere.

A simple thank you message, with no additional add-on, subscribe or offer included post-purchase adds credibility and authenticity to a sale process.

5. Consider a lifetime approach

Customer loyalty is about the promise of repeating trade, rather than a quick cash grab.

Franchisors must create a culture of customer appreciation among all franchisees; after all they are the life-blood of the entire operation.

Barnard said measuring the cost of customer retention against customer acquisition highlighted the importance of looking beyond today’s sales.

“Determine the value of the customer, and invest in ways to keep them happy. We suggest dedicating at least 10 per cent of your marketing budget to activities which keep existing customers happy and drive them back in-store or online.”

Generating customer loyalty

So, should franchisors consider rolling out a customer loyalty program at all? In reality, loyalty programs serve as a tangible method for attracting returning trade, however they are only effective when the strategy is clear.

If you are looking to build rapport among your current catalogue of clients, focus on getting the basics right from an individual unit level before steam-rolling into customer loyalty programs.