Loyalty and rewards programs can be powerful tools for success in any business. This is especially true in B2C businesses, such as boutique fitness studios. While many studios focus on bringing new clients into the studio with enticing intro offers such as “first time free,” studio managers often neglect to enact marketing efforts that focus on customer retention.

It is Easier to Retain a Client Than it is to Acquire a New Client

According to research published by Frederick Reichheld of Bain & Company, acquiring a new client can be up to seven times more expensive than retaining an existing client. What this means is, when studios neglect client loyalty, they are losing out on a great deal of profit. One relatively simple way to increase clients’ loyalty is incentivizing clients with loyalty programs.

Customize Your Loyalty Programs to Maximize Your Profits

It’s easy to put in place a “punch card” style loyalty program – i.e. “for every ten classes taken, get one free.” While these loyalty programs can be somewhat successful, the most successful loyalty programs are ones that correctly address the client at his/her stage of the lifecycle. For example, a client that has only ever taken one class in your studio will not be enticed by an offer of one free class for every nine taken. A brand-new client that is still in the ‘trying-it-out’ phase won’t look that far into the future. To mitigate this, you can create multiple loyalty programs that run simultaneously.

A good rule of thumb to consider when structuring your loyalty programs is to offer more to your less loyal customers. Counter-intuitive, right? However, if we stop to think about this for a second, it makes sense. Simply put, it’s easier to get a client that purchased one hundred classes to purchase his/her one hundred and first class than it is to get a client who purchased only one class to purchase his/her second class.

A well-structured loyalty program might look something like this: after a client takes two classes, the third class is discounted or free. After that, you may offer a discounted or free class, or possibly store credit after another five classes taken. Ten classes after, you could again offer a discount of sorts, or maybe something fresh like a smoothie (no pun intended). No matter what you offer, you want to structure your loyalty program to align with your specific market and your intro offers.

Don’t Neglect Your Champions

While it is important to create strong incentives for your new customers in an effort to retain them and convert them to regulars, it is important not to forget your true champions – your regulars. These are the clients you see every week for months and possibly years. For these clients, you want to make sure they don’t feel left out or neglected by all these great perks you offer your newer clients.

A free class isn’t the right incentive for your regulars. This is for two reasons. First, your regulars are your bread and butter. You can’t just give them free classes all the time. We discussed how it is important to put your biggest financial incentives into your newer clients. Second, they are likely past the point this will be impactful for them. I propose a more personal touch that really shows you appreciate them. One cool idea can be a personalized t-shirt with both your logo and the client’s name on it. This can create a strong emotional bond between you and the client, making sure they feel appreciated.

Nothing Can Replace Customer Service

No matter what incentives you put in place, never forget that it won’t replace good customer service. Loyalty, more than incentives to return, is generated through positive experiences. Make sure that you are providing the best possible service to your clients all around and you will see long-term gains. Good luck!

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By Roy Eldar, Business Development