Give Your Customers a Head Start

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Who doesn't want customer loyalty and repeat sales in their online business? If that's you, click away because this thread is not for you.

The consumer research team of Nunez and Dreze wanted to test whether or not buyers would be more loyal and return for repeat sales if they were given a head start on an incentive program.

To test their hypothesis, they handed out "loyalty cards" to customers of a local car wash with the instructions that every additional wash that was purchased would earn a stamp on the card. When the loyalty card was filled, the card holder would get a deluxe wash free of charge.

What the cardholders weren't told was that there were two types of cards. Half the loyalty cards had places for eight (8) stamps. The other half had places for ten (10) stamps with the first two places already being stamped. In essence, the two cards were the same as they both required eight stamps for a free wash.

After a number of months the test was completed and the data was compiled. Twice as many of the ten stamp cards were turned in for the free wash as the eight stamp cards. Apparently, people that felt they had a head start (a "free" 20% of the goal was already reached before they returned for their first repeat purchase) on their goal tended to finish twice as often as the 8-stamp group.

Not only were the 10 stamp cards returned more often, they were turned in faster - 3 days faster between washes for the 10 stamp group. It was also documented that the closer people got to completing their loyalty goal, the more effort they exerted on finishing the program so they could claim their goal.

Granted, this was just one small test and your results may vary. But as an Internet marketer, I'm thinking to myself . . . how can I apply these findings to my own customer loyalty initiatives? Here are a couple of my own ideas:
  • Am I using customer retention incentives? If not . . . why not?
  • What can I offer in my own business as a loyalty reward that customers will want?
  • Can I offer incentives that will speed up repeat purchases?
  • When asking for customer input or feedback, are there incentives I could give to nudge my buyers for feedback?
  • Are there ways I can make the loyalty process easy and partially done already?
  • In my sales copy . . . how can I show prospects that they have already taken some of the important and necessary steps toward reaching their goal?
  • How can I structure my sales process (or funnel) so the prospect feels like he/she is making progress toward an end?
  • Can I help my customer "keep score" so he sees that he is making progress?
I'm sure you have other ideas for your business. Feel free to share them.

Steve
#customers #give #head #start
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  • Profile picture of the author Brent Stangel
    I used to buy all my tobacco products from a store with loyalty cards. For every $10 spent you got a punch. A fully punched card (10 punches) earned 5% off your order and got you a new card with the order total punched so you were already on your way to filling another card.

    I've been thinking about doing this or a variation for my ecom store.

    Brent
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  • Profile picture of the author doorji
    I agree with your ideas. Great ideas. I will try following with my clients.
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  • Profile picture of the author Steve B
    I thought of another application of this principle last night.

    What if you were offering a fixed term membership site? Let's say you were selling 12 months of services, products, or coaching on a recurring billing basis.

    Could you offer the first two or three months free? Would that incentive help to nudge your prospects closer to the sale? I've seen this principle work for gym memberships - and I'm guessing it could work for online marketing businesses as well.

    Steve
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  • Profile picture of the author OptedIn
    People love money. I built my business doing zero advertising strictly through referrals. After I complete a job to the client's satisfaction I would ask them to please give me the names of 3 of their business associates or friends that run small businesses. I would ask them to call ahead of my contact to prime the pump (a term that I created, by the way). Whatever I sold to the referrals would result in a 10% cash payment to the referrer, without them being told in advance that it could be expected.

    The only thing better than money? Money falling in your lap that you never saw coming. All of my clients have been my best sales associates. I even get them telemarketing for me. :-)

    Thank you.
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  • Profile picture of the author Frank Donovan
    Excellent point, Steve. I remember reading about that experiment, and I've since seen a similar principle employed in coffee shop loyalty schemes and many other businesses. Just shows the power of momentum.

    It's also a useful hack for when you're faced with a dauntingly large project and need the impetus to get started. If you just begin with some action - even a small, seemingly insignificant one - it can provide that all-important momentum you need to get to grips with it.
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    • Profile picture of the author Steve B
      Originally Posted by Frank Donovan View Post

      Just shows the power of momentum.
      Thanks for contributing Frank . . . and I couldn't agree more with your suggestions about creating some momentum. People love momentum - they love working toward a goal, being a part of something that has a purpose or joining a cause.

      I've seen this principle at work many, many times in both business and in life. Someone, often a skilled leader, takes up a banner or "crusade" and boldly strikes out to meet some goal. Others see the example, get inspired, and join the movement. I think humans have some inherent or innate desire to achieve, to be a part of something that moves them!

      Thanks for sharing.

      Steve
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