In today’s business world, it’s rare that you’ll find a company not employing a customer loyalty program. Hugely successful for both big and small businesses, loyalty programs reward repeat customers. In turn, repeat customers help to increase sales, profit and overall business.
Based on a report by Manta and BIA/Kelsey, repeat customers spend 67 per cent more on a purchase than a new customer. The same report shows that boosting customer retention by as little as 5 per cent can increase profit up to 80 per cent. With that said, it’s cheaper to build loyalty with existing customers than it is to recruit new business.
I’m living, breathing proof of loyalty marketing in action. My office is situated right across the street from a big-brand coffee chain. About a block down the street there’s an independent coffee house that charges the same five dollars for a latte as the coffee power-house conveniently situated within view of the office window. However, the independent coffee house gave me a “coffee card,” rewarding me with a stamp for every coffee I purchase, and after eight stamps my ninth beverage is free. Is it the challenge of filling up the card that draws me to return there every day? Maybe. But whatever the case, I think the loyalty card must be working.
While customer loyalty programs are good for all businesses, here are a few reasons why they are especially beneficial for small businesses:
Convenient in this Web 2.0 world
In our tech-savvy society, it has become increasingly common for loyalty programs to go digital – granting access to rewards through tools like apps that are accessible without a card. This is a cost-effective way for a business to provide customers with the incentive to make repeat purchases, not to mention it’s far more convenient. Going mobile also allows for social network integration, something that helps connect small businesses with an audience online.
The best part? No business will have to hear “I forgot my card” ever again.
Generates a system of brand advocates
A well-executed loyalty program is not just a way to retain customers – a loyalty program can actually help to boost the growth of a small business. A good loyalty program should be a reciprocal relationship, building a bond between business, brand and consumer. Some companies offer discounts for their loyalty program members to share deals with friends – 20 per cent off a purchase for you and a friend – not only benefiting the returning customer, but also creating new business and support as well. A loyalty program can help a business build a network of supporters who will support and share the brand.
Gives an edge over the competition
Most of us demonstrate customer loyalty on a daily basis with our regular purchases; think about where you purchase groceries, gas or even sports equipment. Loyalty programs encourage patrons to choose one business over the other, even if the two are virtually the same, quite simply because we all want to save a few bucks here and there. It is any easy way for a business to make their mark as a competitor in their respective market, all because their customers feel appreciated through incentives and rewards.
Developing a customer loyalty program is well worth the rewards… rewards for both business and customer. Loyalty programs not only drive customer retention, but can help small business reach their full potential and expand their customer base. Technology makes rewards programs cost-effective and accessible, and these programs help to generate support for the brand while providing a competitive edge in the market.
Sources:
Boosting customer retention by 5 percent can increase profits by as much as 80 percent. – http://www.entrepreneur.com/article/233021
Based on the same report by Manta and BIA/Kelsey, a repeat customer spends 67 percent more on a given purchase than a new customer does – http://www.entrepreneur.com/article/233362