The Membership Program Benifts:
For any home-based business to prosper, it is not only essential to generate sales, it is also equally important that there is a consistently high rate of repeat business.
In this respect, some businesses that have products that rely heavily on repeat business constantly offer extras to loyal customers. Complimentary items like giveaways or freebies are popular to attract customers to purchase repeatedly.
Another strategy would be to develop a membership program where repeat customers hopefully become your 'captured market'.
Developing a membership program is dependent on the type of product or service that you offer. In general, these programs lend themselves well to businesses like video rentals, bookstores, gasoline stations, internet cafes; in short, to businesses that involve customers who normally purchase the product consistently over time.
Even 5-star hotels have resorted to membership programs, bringing in guests as 'club members'. The airline industry too cultivates customer loyalty through its frequent flyer programs.
The A, B, C's of Establishing a Membership Program - Develop your membership program with these simple guidelines.
- Study your market and identify your different customer profiles based on gender, age and income bracket. Your membership program should be simple enough to appeal to all these categories, without making it appear too complicated that no one would want to join.
- Make sure that the items you include as incentives for membership are well within your margins to give, and not cause you to lose profits.
For example, if you run a video rental business and give a members promo of 1 free DVD for every 3 rented, make sure that your rental pricing can support your giving out that extra DVD at no cost and still turn a profit.
- Develop a membership database that you can use should you want to have a temporary promo. For example, you offer a 20% discount to all members who have purchased at least $100.00 over the past year. You can send out a mailer, e-mail or even phone these customers and inform them of this exclusive promo. This will generate more sales for you (note that these $100.00 members are your active customers) but it can also mean more memberships to avail of future discounts.
- Give incentives to members who bring in new members. This concept of networking will increase both your membership and sales - the so-called multiplying effect of networking.
- Repeat customers should always be automatically made members. Not only does this make them feel that they are important to you, it likewise gives them all the more reason to purchase more. Over time, your base of repeat customers to members will grow to hopefully major proportions and this means good business in any business book.
With the very tough and aggressive competition right now, the concept of customer loyalty cannot be overly stressed. Keeping your customers loyal by making them members and eligible for additional value from your business will mean a lot to maintain and increase your bottom line.
Action Steps to Develop a Membership Program
- Study your market and customer base so you come up with the most appropriate membership program.
- Ensure that your membership program is not eating into your sales to the point where you are gaining clients but losing revenue!
- Make referrals a part of your membership program.
Important Points to Develop a Membership Program
- Membership programs cultivate customer loyalty.
- Membership programs encourage repeat sales.
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