Too Much of a Good Thing

The effectiveness and popularity of loyalty programs have not been lost on small business marketers. In fact, practically every category—from rental cars to telecommunications— that sells to entrepreneurs offers some type of small business loyalty program; if small business owners buy a product or service, you can bet they will be offered membership in a loyalty program.

Not surprisingly, of the 400 small business owners we interviewed for our loyalty program study (they had to be a member of at least one loyalty program to participate in the study), more than 60 percent of entrepreneurs belong to more than one program and almost 20 percent belong to four programs or more (see Figure 4.4).

If so many entrepreneurs are members of more than one program already, does the world need yet another small business loyalty program? Maybe. Before you launch your own, however, seriously consider joining an existing coalition program. These programs join together a group of companies

Among those who are members of at Least one Loyalty program Don't Know/

Among those who are members of at Least one Loyalty program Don't Know/

4 Programs 8.5%

39.2% 1 Program

4 Programs 8.5%

39.2% 1 Program

Figure 4.4 Number of Loyalty Programs to Which Entrepreneurs Belong

Source: Warrillow & Co., "The Impact of Loyalty Programs on the Buying Behaviors of Small Business Owners," Warrillow Report, Issue 04, Vol.01, Toronto, 2000.

that share a common desire to reach small business owners. Each sponsor company agrees to a certain level of cross-selling and information sharing.

Coalition programs have the added benefit of being acquisition tools as well as retention methods. When we asked Fortune 500 companies what they liked best about being a member of a coalition loyalty program, they cited the ability to cross-sell to other coalition members' customers as their favorite part of their loyalty program arrangement.

The small business market may not need another loyalty program.

Another tactic used to compensate for a lack of one-on-one account management in the small business market is the creation of chat rooms on the web site of Fortune 500 small busi

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