Pirates of Profits – Customer Loyalty All Aboard the Member Ship Don’t miss the Boat (and the revenue) in 2009!

Do we have a membership program in place for our business? If not, we are not only missing a huge revenue stream from advance sales and membership fees, our spending on traditional advertising is much higher than it should be. Research from Bain and Co. shows 90%+ of responses from traditional advertising are generated from existing customers. Have we considered offering a low cost yearly membership into our business with special savings, perks, and other benefits for members only? There are very inexpensive solutions to design custom membership, rewards, and fundraising benefits on one custom card. We not only open our door to significant up front revenue, we brand our logo (or business name) inside the wallets of our best customers. Imagine getting paid to advertise! Similar to supermarket cards, these custom cards are much more powerful and allow us to build our database without paper forms, sign‐up sheets or data input fees. Let’s look into this powerhouse marketing philosophy a little more closely. Why a Membership Fee? Business owners continue to spend a great deal of money on outdated advertising techniques such as newspapers, coupons, magazines, or improperly designed branding and sponsorship strategies. These programs are not only expensive, they are difficult to track, do nothing to build our database and do not provide quantifiable ROI. Instead of paying a middle man (such as the newspaper or Val‐Pac) which does nothing more than remind 90% of our existing customers to pay a lower price, why not get paid in advance to bring these same customers back more often? Sound impossible? It’s all very easy with the properly structured rewards and membership program. The news we have seen lately on the popularity of coupons during recessionary times, don’t believe it! People do not like coupons as reported; they like saving money and simply put up with coupons since we have not seen any alternative solutions for over 75 years! People love saving money, but they also love convenience and saving time. If we can combine all of these emotions while getting paid in advance to do so, we have a much better mouse trap. People love the idea of belonging to a family or getting good deals without the hassle of searching through 10lbs of Sunday newspapers. By creating a membership program for our business, we end up taking in a good deal of advance capital before any products are purchased. In addition, if we can supply a permanent solution to saving money, we avoid our customers looking through all these ads and finding our competition offering a better deal! Fantastic Service but Membership Better! I recently explained this phenomenon of waste to large haircutting chain which will remain anonymous but they are Fantastic Sam! Even though this particular chain is within walking distance of my home and I like their service and price, I still end up going to a competitor’s salon 3‐5 times per year or more! The reason they miss my business? I end up noticing some type of coupon or special offering a lower price to go somewhere else. I hate looking through newspapers and organizing those stupid pieces of little paper in my wallet, but I love saving money! Since I am not sure if this Fantastic local salon is offering a

better deal today, I end up walking into a competitor’s location rather than waste time calling around in the hope of finding a better price. If this Fantastic place would have offered me a membership program, I would have signed up on the spot! Let’s say they would charge me $25.00 per year to JOIN. Here is what I might have received

A. One FREE haircut with my membership during 12 month period. B. 10% cash back GOLD membership benefits (NO DISCOUNTS LIKE STARBUCKS!) C. 20% member only cash back benefits on Paul Mitchell products. Not only does Paul

Mitchell pay for these rewards on behalf of this Fantastic place, they paid for the entire program to have their logo and exclusive rewards driven to their brand, no other competitor’s hair products feature these rewards. This is what I mean by getting paid in advance to develop programs and take in huge amounts of upfront cash.

D. Front of the line benefits! When I walk into the store, I don’t wait in line; I get moved to the front due to my Gold membership privileges! If the other customers don’t like it, they can join on the spot as well and not be replaced!

E. Any other little freebies like added conditioner, massage on the shoulders, coffee, you name it, anything that makes me feel special without any real hard cost.

F. Automated thank you emails with account updates, rewards balances and incentives to keep loyal and visit more often.

G. I even support my school or church with every visit as a small percentage of my spending is allocated to my non‐profit of choice! The accounting and tracking is real time so my church can see and verify how much money is being raised on their behalf and my visits.

H. I even help sustain the environment as a small percentage of my visit helps the business with green alternatives to keep jobs in the U.S. and help stop waste and pollution.

Think I am going to another salon? Not a chance, I feel like a big wig! (pardon the pun) Understanding these philosophies with the proper technology partner would mean MILLIONS of dollars in extra revenue (ever year) for this chain and many others like them. In addition to the added revenue, the savings on coupons, discounting, advertising, and other wasteful and expensive mediums would be greatly reduced and possibly eliminated within a few short years. Why are not more companies utilizing these techniques? There has been a shortage of inexpensive solutions to track and supply these benefits until now! Whether you own one haircutting salon, one bowling center or one restaurant, there are solutions in place right now which will pay you IN ADVANCE while depositing significant cash in your register from membership fees without selling any product. The time to get off the ship of wasted money and re‐board the Member Ship of profits is NOW! What about NEW customers? I love my Fantastic membership benefits so much I just had to tell my neighbor! Guess what? Even though my neighbors were visiting a SUPER CUT competitor, they joined the Fantastic alternative due to my excitement over the program. These neighbors went from feeling SUPER to feeling FANTASTIC! They wanted to support their church and the planet with every visit as well. They love saving money just like I do and I was always told the best form of advertising was word of mouth and now I have a good reason to open my mouth and start advertising for this Fantastic place!

Think I’m weird? Think again. How many people do you know like to feel valued and recognized while saving money at the same time? How many people would like to frequent a business that supports the community and sustains the planet with every purchase? What if all of these important emotions and benefits were realized with every visit? Think this raises the bar and the feeling of value to the customer? First mover advantage on these benefits may very well create the next Xerox, or Kleenex brand in the marketplace. What about Competition? What competition? I am so happy with the benefits of my Fantastic membership; I no longer look for specials or coupons from competitors. I even enjoy looking at the beautiful card inside my wallet which I often show to my friends and encourage them to join as well. Each time I see the card (an average of 8 times per day) I think good thoughts about this Fantastic place, no wonder they have Fantastic in their name! I often wonder why other business owners don’t follow suit and offer me membership into their business as well. I have been looking every day for the past 5 years and have yet to find another business willing to accept my money; they don’t have a program like my Fantastic place. As a Baby Boomer, I am NOT brand loyal, I am loyal to a good deal, recognized value and good will. Why don’t I see more membership plans in these recessionary times? Why are companies turning down record profits while continuing to waste valuable resources on outdated solutions? Can you help me? What is the Mystery? We all know the 80/20 rule but apparently we forget to implement it when it comes to marketing common sense. Since 20% of our customers yield 80% of our profits, let’s design a program to reward these 20% accordingly and keep them loyal to our brand. We simply design a beautiful custom rewards, membership, fundraising, gift, and loyalty card they carry inside of their purse or wallet. We still welcome the 80% of customers who yield just 20% of our profits, but we no longer spend a fortune on advertising to attract them. What is Loyalty? The proper loyalty program orchestrated with a membership mentality will not only lower existing advertising budgets, but increase the bottom line at the same time. I am a loyal customer of King Soopers, but I still shop at Hays in Berthoud, CO as well as Wal‐Mart and Albertsons in Longmont. You see, customer loyalty is not the same as marital fidelity! The proper program should not only create customer loyalty, it should increase the percentage of loyalty by that same customer to a particular brand. If a loyal customer visits one particular brand or store 25% of the time, why not increase that loyalty to 50% or 75%? It costs much less to accomplish this task rather than continually spending a fortune in advertising to attract new customers. Research from Bain and Co. revealed that a small 2% ‐ 5% lift in customer retention or increased loyalty will bolster the bottom line by a whopping 50% ‐ 75%! A survey by Forrester’s Research showed over 90% of CEO’s view customer loyalty as their top priority for 2009. In many cases, a simple yet effective membership program featuring a custom membership card is the answer.

What about levels of membership like Gold or Silver? Another FANTASTIC idea is to feature different levels of membership such as Gold, Silver, or Platinum. Gold might be $20.00 per year, Platinum might be $50.00 per year. Each level offers added freebies, rewards, feeling of value and possibly higher cash back benefits. We might spend $2000.00 for a 5000 card package and bring in $50,000 or more in the first 30 days with membership fees. While taking in this money we simultaneously reduce or eliminating our advertising budget. Any one need an extra 50k to bring in more business without writing checks to the newspaper? Remember, these are not necessarily new expenses or added promotions; they are the same benefits we used to spend a fortune on in advertising to let people know they were offered! The proper loyalty card program The proper loyalty and membership card program should be very inexpensive to implement and should feature a solution to have all the expenses paid by sponsors in order to share their logo on the card. If you need help in creating and designing an award winning solution for record profits in 2009, please contact the author below. Thank you, Steve Schroeder Steve@PermissionRequired.com 562‐201‐2580