Remember trading stamps? If youre over 40, chances are you will. Every time you shopped at a participating grocery store or gas station they gave you stamps to paste into a book. When youd accumulated enough stamps, you could cash them in for free gifts.

These stamps were one of the first loyalty programs. They kept customers loyal to a particular product or merchant because they offered an incentive that encouraged the customer to keep coming back and spend more money.

While trading stamps are a thing of the past, a wide range of industries still use loyalty programs to establish long-term relationships with their customers. By far the most successful and well known is the frequent flyer program.

On the surface, frequent flyer programs appear to be all about rewarding customers with free flights just because they choose to fly with a particular airline the more miles you fly the more free miles you get. But, if you asked the airlines who really benefits from these programs, chances are youd hear a resounding, We do. Ask them to explain, and theyll likely tell you that frequent flyer programs allow them to collect data on individual customers, help them tailor their mailings and special offers to the customers specific needs, allow them to promote higher fares, and ultimately increase their sales.

But, as popular as frequent flyer programs have become they only work if the service offered by the airline is good enough to earn the customers trust. And that means not only offering a quality flying experience but great customer service and on-going communication.

For smaller businesses, the benefits of establishing a loyalty program are no different to those enjoyed by the major airlines. And equally, the programs success depends on first establishing the three most important elements of building that loyalty:

1. Treat your customers right, and theyll be yours for life.

Your customers will not only judge your company by the quality of your product, but also by the level of service you offer. Offer one without the other and you may as well give up now.

Great customer service includes, among other things:

Credibility: Your customers should be able to trust you. No one wants to be on the alert for the small print or hidden charges. They want to know that your company can be trusted and has their best interests at heart.

Flexibility: Never use the words, Im sorry but its not our policy. Always solve your customers problems, even if it means losing the sale. Theres nothing worse for a customer than a company that will not go out of their way to accommodate their needs.

On-time Deliveries: If youve ever ordered a product and been told that the delivery time is 6-8 weeks, youll understand the frustration a customer experiences. Unless the product is out of stock, or is an international delivery, theres no earthly reason why a product should take 6-8 weeks to deliver. Similarly, if you promise a certain delivery time, you must abide by it. If you say the product will be shipped within 72 hours, then ship it within 72 hours. If for some reason you find you cant meet the delivery time, notify the customer and give them the option to cancel their order.

Accurate Billing: We all know mistakes happen. But when you make a billing error or you overcharge, you immediately lose credibility. Add to that the time is takes for a customer to contact you to complain or get you to adjust the bill, and you may well have lost a future sale and the potential sales of friends and family theyve complained to.

Hassle-free refunds: Weve all been there. For some reason we change our minds about a product, or it doesnt work properly, or its not quite what we expected. And we want our money back. Make sure your customers know this is an easy process, up front.

2. Obtain Customer Information

If you want your loyalty program to succeed you must obtain background information from your customers. A program that only requires a name, address, and proofs of purchase isnt building a long-term knowledgeable relationship with them. And it makes sense that a customer who will take the time to complete an enrollment form is going to be more interested in the product than a casual purchaser. When designing your enrollment form make sure you get information on product usage, purchasing habits, attitudes etc. That way you can tailor your products and services to your customers specific needs. And build a database of customers who actually want a long-term relationship with your company.

Keep Communicating

One of the easiest ways to keep customers loyal is to establish on going communication. This can be in the form of emails promoting special offers, letters announcing new products, electronic or print newsletters or even offering educational materials. Another good way of continuing communication is to send them something useful with your company name on it. These simple, inexpensive gifts keep your name in front of a customer, and help to keep them loyal.

Need some help thinking up a loyalty program for your business? Here are some suggestions.

• Gift certificates: Offer your customers a gift certificate when they spend a certain amount of money. For example, if they buy $200 worth of goods during a six-month period offer them a $25 gift certificate.

• Offer point programs: Give your customers points for every $10 or so they spend. When theyve acquired a certain amount of points they can exchange them for selected goods or services.

• Free Shipping: This incentive is a sure-fire winner for mail order and online companies. Offer free shipping on orders over a certain amount or on future orders.

• Communications: Newsletters, pamphlets, direct mailings, postcards, magazines, white papers etc. All these can be used to increase customer loyalty. They dont need to include a special offer or discount, but it will help.

Properly implemented loyalty programs are a long-term marketing strategy that takes a lot of work and commitment. But, getting new customers takes a lot of work too. So, it makes sense to do everything you can to make sure that every one of those customers keeps coming back time and time again, and recommends you to others.