Sweet RewardsAn effective rewards program will keep customers coming back. Here are five keys to creating one for your biz.

Have your sales hit the summer doldrums? Maybe you're notgiving your customers a good reason to buynow. Ifyou're looking for a smart way to stimulate sales, considerinitiating a customer rewards program. For many types ofbusinesses, customer acquisition slows during the summer months,and this is a great time to upsell or resell current customers.Rewards programs give your best customers a reason to spend withyou instead of your competitors. And an effective program willstrengthen customer relations and build long-term revenue that willlast far beyond this summer.

Here are five tips for putting a customer rewards program towork in your growing business:

1. Start by building a database.Every good retentionprogram begins with a database of customers who share informationwith you during enrollment. But that's just the beginning. Bycompiling customer data throughout the life of your program, youcan tailor your offers based on customers' past preferences andpurchase histories. If your original database contains a largenumber of lapsed customers, offering an instant reward onactivation (when they make their first purchase) is a great way tobring them back. For help setting up your program, consider using aloyalty-marketing software provider, such asSmart ButtonAssociates.

2. Raise customer expectations.The best programs buildexcitement by letting customers know exactly what rewards they canexpect and how they can earn them. For example, suppose you wereshopping online, and one site promised future savings if you signedup for a rewards program, but it didn't convey exactly what youmight earn, while a second site offered a gift with purchase atenrollment and a bonus with every third buy. Wouldn't you findthe site with the clear rewards more enticing?

3. Offer graduated rewards.To stimulate maximumparticipation in your program, make your rewards readilyobtainable--and graduate them so that you transform a higherpercentage of your database from low-value to high-value customers.This will help you avoid the pitfalls of programs that rewardprimarily on enrollment, which tend to attract low-valueprice-switchers who join to take advantage of first-time buyerrewards. Graduated rewards can also energize sales of yourhigher-ticket items, including those that customers might otherwiseconsider out of reach.

4. Provide in-kind rewards.Suppose you owned aneighborhood music store. Which would compel customers who earnedrewards to come back and buy from you (rather than the superstorearound the corner): two free movie tickets, or 20 percent off ontheir next CD purchase in your store? The bonus on their next CDwould bring them back to make a subsequent purchase. It would alsomake the program itself more memorable because the reward would beassociated directly with your product. Best of all, the 20 percentdiscount would represent real value from the customer'sperspective, while your cost would be minimal.

5. Create an ongoing dialogue.Follow the example ofmajor online and off-line retailers by communicating often. Manysuccessful catalogers immediately send follow-up mailings aftereach purchase. Online marketers can communicate frequently tointroduce new perks and special offers, thanks to the affordabilityand quick implementation of e-mail campaigns. And brick-and-mortarretailers can enroll customers at checkout and then communicateabout rewards via e-mail or direct mail. Since customers areactively interested in news about their rewards, they'rereceptive to maintaining ongoing interaction--which ultimatelyleads to more sales.

And here's a final note:The data you collect byvirtue of your rewards program can also help you improve yourcustomer acquisition results. Just take what you learn about yourbest customers, and tailor your marketing approach and media toaddress prospects with similar characteristics.