May 28, 2013

By: Maria Parrella-Turco

More than 85 percent of the American population is involved in one or more loyalty programs, which means that loyalty programs are now a price of doing business and cannot be ignored. Large businesses have discovered that point banking loyalty programs are the best way to drive consumer behavior. The ability to accumulate and save points to later redeem for larger gift rewards continues to build enthusiasm for this type of rewards system.

Given the popularity of loyalty programs, they can be surprisingly ineffective. That’s right, ineffective. A loyalty program, like any program, is only as good as its ability to engage and drive behavior.

To stand the best chance of success in tough market conditions, programs must enhance the overall value of the club or service and motivate members to make their next purchase, participate in an event or activity, or inspire a friend to enroll. Good loyalty programs also should motivate members to stay members.

Here are seven steps for implementing a good loyalty program in your facility:

  1. Put the right program in place.
     Be cautioned by loyalty programs that you can start in 40 seconds by using an app and that are not customized for your business. Ensure that you work with a company that understands your clubs goals and has experience in building a loyalty program with stickiness.
  2. Make it Stick.
    Start by making a list of behaviors you want to drive in your club; such as rewarding for visits to the club, participating in training sessions, awarding our top spenders, or referrals. Next, determine what will motivate members to participate in those behaviors.
  3. Dangle the carrot. 
    Although a direct reward is great, leave room for something more to be attained. Point programs with levels work well in accomplishing this. Members will look for ways to earn more and your business will benefit from the breakage and shrinkage of points while driving behaviors from your members and building loyalty.
  4. Stick with it. 
    Give a program at least six to 12 months before evaluating the overall impact. Consistency and ongoing marketing is a key factor in getting the word out and building momentum. Good clubs reward and recognize their top spenders, referring members, and event and program participation with consistency. By visually and verbally recognizing members who are top users of your loyalty program, you will ultimately create more users.
  5. Create a scoreboard. 
    What is it that you would like to affect? If you want more referrals, then find out how many referrals you are getting now. How many do you want to attain this month and going forward each month thereafter? Most clubs forget to keep score. Once the metrics have been set, it’s important to keep score. Ensure your loyalty program can measure return on investment.
  6. Involve the staff. 
    Usually a club’s most successful program is the one that the staff participates in. So, ensure that your staff can also participate in the reward program. Customize the ability for your staff to earn, for example if they receive a compliment from a member or hit a sales goal. Also, customize their reward catalog such as paid vacation days or lunch with the boss.
  7. Market. 
    The loyalty program must be layered into multiple marketing messages. All member communication should drive members back to your loyalty program. If you do not layer your loyalty program into most of your member marketing, it won’t stick. Members should be communicated with monthly via in club signage, social, digital and mail.

If you’re following the pointers above, you will succeed in developing a successful program for your club and successful loyalty programs provide a return on investment!

The club business has historically been a retail sales minded industry with little focus on loyalty and retention. A clubs biggest expense is not payroll, its attrition. Good programs cost only a few hundred dollars a month with thousands of dollars in payoff. Getting the penny out of our eyes to see the dollar is usually the most challenging part.

Maria Parrella-Turco is a Health & Fitness Industry Expert serving the industry as a speaker, entrepreneur, and writer since 1990.  She is a lead trainer for the NPP University and Franklin Coveys 7 Habits of Highly Effective Health Club Managers, and founder of fitRewards.