When the economy starts to flounder, small business owners rely on customer loyalty and retention to weather the storm and continue driving sales. For individuals invested in franchise opportunities, this business principle is no different.

Franchisees have the benefit of strong, already proven marketing schemes and business-driving strategies to help them succeed, including customer loyalty and rewards programs, Franchising.com contributor Kerry Pipes reports.

One of the benefits franchisees reap from building customer loyalty is that it allows them to reach out and expand their base with the help of existing customers. Customer referral programs use incentives and face-to-face contact to increase business. For example, the Friendly Computers franchise provides customers with business cards that offer 10 percent discounts for the first service call to distribute among their friends. If a card is redeemed, the existing customer receives a $5 discount off his or her next service call, the Web site writes.

The benefits of an effective customer retention program are undeniable, both for the franchisee and the customer. And Americans are not shying away from adding their names to e-mail lists, text alert programs and other memberships. According to Entrepreneur magazine, a report from the Chief Marketing Officer Council found that Americans hold 1.8 million loyalty club memberships. Additionally, the average U.S. household is enrolled in more than 14 customer rewards programs.

With the popularity of loyalty and rewards programs, potential franchisees should consider how a franchise retains business and what it offers its best - or most frequent - customers. Potential franchisees should evaluate a wide range of customer service initiatives, from consumer savings to treatment.

Coupons and special deals are usually what come to mind when most people hear “rewards.” But how a company handles its customers is equally important. Franchisees should evaluate how customers can contact a company - is its service center automated or can individuals reach “real” people?

Additionally, franchisees should investigate the company Web site. If they were the customer, what would the company offer them? Coffee franchise Starbucks runs an interactive, relationship-building program at MyStarbucksIdea.com, where a reported 180,000 users have left comments and suggestions to help the franchise improve.

However, not all companies are so open and soliciting of customer input. Franchisees should beware of franchisors that offer loyalty programs with fine print or black-out dates. When rewards can be used only at certain times on certain days, business growth is diminished.





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