The other day I walked into one of the local spas by my place…
…and I realized how clueless small business owners are when it comes to using the web to market their businesses.
They thanked me, and they also said they hoped I came back again soon.
And that’s it.
They didn’t ask for my email address.
They didn’t offer a loyalty program
Now take a guess what I said…
“You guys are crazy! You’ve got customers who come in for massages, and you’re not building an email list?”
“Let me ask you a question: Do you find that most of your customers are regulars or one-offs?”
And they said “We have a lot of regulars, but we also have a lot of one-off customers.”
I went on to say “how awesome would it be if you converted more of those one-off customers into regulars?”
Naturally, they were interested.
How to Convert One-Off Customers Into Regular Customers
So, I went on to tell them the perfect email marketing strategy for a spa.
(If you’re not building an email list, i highly recommend AWeber. It’s who I use. Here’s my affiliate link).
I told them to get the email address of every single customer that enters their doors.
Then, I told them here’s what they should do:
- The day after the massage, send a helpful reminder email reminding them that it’s important to drink water after a massage. And that’s it.
- 1 week later, I told them to send an email where they just check in with the customer. No sales pitch. Nothing. Just a simple email asking them how they’re doing, and then share some data / research about the importance of getting a massage regularly.
- 2 weeks after that second email, I told them to send one more email where they offer a loyalty program…
…but not just ANY loyalty program!
Here’s How To Create Loyalty Programs That Work…
I told the spa to structure their loyalty program like this:
If the prospect scheduled an appointment today, they’ll gain access to a special loyalty card that would work like this:
For every 10 massages, get one free.
But here’s the kicker!
To entice them to schedule the appointment right away, I told the spa to tell them this:
Get the appointment now, and we’ll punch your card for this session, the session you already did, and we’ll give you a free punch too.
That way, if people come in for a massage during that week, they get 3 massage sessions of credit…
…and they only need another 7 massages to get a free one.
Why is this KEY?
I’ll tell you why.
How One Car Wash Implemented A Loyalty Program
I wrote about the car wash loyalty experiment a while ago, but here’s a quick refresher.
Two researchers, Joseph Nunes and Xavier Drèze, conducted a customer loyalty experiment with a car wash…
…and they found that “artificial advancement” increases customer loyalty 82%.
What’s artificial advancement?
On two consecutive Saturdays, they gave out loyalty cards to car wash patrons. Half of the cards required 8 car washes to earn a free car wash. The other half required 10… but instead of requiring the full 10, the car wash gave a 2 car wash head-start as a free bonus.
In both scenarios, the patron needed to buy 8 car washes total to get a free car wash.
However, in the second example, people received a 2 car wash head-start, which is deemed “artificial advancement.”
But here’s what happened:
During the next 9 months, 28 out of 150 people earned a free car wash when they didn’t receive artificial advancement. However, 51 out of 150 people earned a free car wash when they did receive artificial advancement.
The same 8 car washes… one slight tweak… customer loyalty went up by 82%.
But why? Why did artificial advancement increase customer loyalty?
People are more likely to complete tasks when they’re closer to the finish line.
When you start with a loyalty card, and you only have 1 car wash punched, that means you’re 12.5% complete.
But when you start with a loyalty card that has 3 car washes to start, you’re 30% complete.
Even though the patrons need the same 8 car washes, in one instance they’re 70% away from the finish line… whereas in the other case they’re 87.5% away.
A nifty little behavior trick, right?
But there’s one caveat:
The artificial advancement only had that drastic of an effect when there was a clear reason why people were receiving the artificial advancement.
In other words, you couldn’t just give it to people for no reason.
Instead, you’ve got to give them the artificial advancement for a real reason… like a sale… or new customer appreciation… or anything like that.
Now let’s take this back to the spa
Do you see what I did there?
Based on the car wash research, the data says that they’d be 82% more likely to complete the loyalty card when they have the advancement.
So, when you offer the new customer a loyalty card with the opportunity to have 3 massages, you’re giving that customer 30% completion, meaning they’d be 82% more likely to complete the card.
But it gets better…
If these one-off customers didn’t have a massage habit, after getting that many massages, you can bet they’ll develop one.
And all this spa has to do is send out 3 emails after a new customer uses their services.
God I love marketing.
Let’s take this back to you and your business…
How do you follow-up with new customers?
What do you do to try and turn new customers into repeat customers?
Smart email follow-up is the KEY.
So, if you’re not putting your customers on an email list, start doing that.
And if you’re not following up with new customers, start doing that too.
And in those follow-ups, you should approach them as a friend who’s trying to help.
Show them data, give them research, and explain why they made a smart decision. This shows your new customer that you have their best interests in mind, while simultaneously alleviating what’s known as buyer’s remorse.
Then, to get customers to continue buying, using loyalty programs, like the car wash experiment, or the massage card, is just the beginning.
But the reality is…
Running a business is TOUGH.
You’ve got to:
create something people want to buy
… and then get them to buy it.
Fine-tune the thing you created
…and then get more people to buy it.
Now the creation part is on you.
If your product and service sucks, human behavior tricks on a customer loyalty program won’t work.
But when it comes to getting people to buy..
You know, marketing your business… that’s something you should invest in (both time and money).
The Secret to Selling More Of Your Stuff…
When you’re running a business, your job is to make sure your products and services are the best they can be.
And that’s a full-time job.
But if you want to sell more, you’ve got to learn how to market your business, and that’s ALSO a full-time job.
And as you just saw, there are little hacks—just like that customer loyalty hack—that makes marketing your business that much easier.
How can you learn more about marketing?
You’ve got to invest in your marketing skills.
Well, of course, you should continue reading Social Triggers (get free email updates, and you’ll gain access to never-before released content from Social Triggers).
Here, I pride myself on the fact that much of my free content is better than what most people sell.
I always knew that, but what really nailed that home was when my friend Ryan stumbled on my podcast “Social Triggers Insider” and said, “dude, I can’t believe you’re giving those master classes away. I know people who would sell each one for $97”
I mean, don’t get me wrong, I do have a premium training class that more than 1,000 students have enrolled in, and they lov eit.
But that doesn’t mean I can’t create awesome content that helps you… and give it to you for nothing.
(As long as you don’t turn into the “I can get it for free guy,” I don’t mind helping you out :-D)
Because in 2012 and beyond, I believe the companies who focus on helping their ideal customers the most, will win the most business.
“Companies who focus on helping their ideal customers the most, will win the most business.” – Click to Tweet
And I like to practice what I preach.
So, on that note, I hope you enjoyed this article, and I’d love to hear what you think.
Source: Nunes, Joseph and Dreze, Xavier, The Endowed Progress Effect: How Artificial Advancement Increases Effort. Journal of Consumer Research, Vol. 32, March 2006. Available at SSRN: http://ssrn.com/abstract=991962