One of the biggest challenges for any business owner is attracting new customers. This is especially true for small businesses, which don’t have the same advantages of large retailers. If you own or run a small business, knowing how to stretch your marketing dollar is key to your growth. The good news is there is a way to help increase your current sales and collect more loyal customers without significant investment. A simple customer loyalty program improves customer retention, boosts sales and profits, and expands your reach to create a larger and more devoted following for enduring and consistent growth.
In this article, we will look at customer loyalty programs and learn how they can help your business.
Here’s how customer loyalty programs can help you
Customer loyalty programs are an inexpensive and simple way to increase brand loyalty and promote repeat purchases. They don’t require high out-front costs, allowing for ongoing benefits without the risk of unsure returns. You are providing benefits as they buy that encourage them to come back to buy even more without the financial risk of traditional advertising.
Customer loyalty is your secret weapon to profitable growth. But what is customer loyalty exactly?
What is customer loyalty and how does it affect your business?
Customer loyalty is when a customer has a positive relationship and ongoing interaction with your business. It is similar to brand loyalty but is tied directly to customer purchasing rather than overall brand recognition; in fact, a good customer loyalty program often leads to brand loyalty. Brand loyalty is important for smaller businesses, as they can form a personal relationship and customers feel positive about directly supporting a local business.
What is a customer loyalty program?
A customer loyalty program rewards certain customers with special offers. You can choose from a wide range of programs for any number of needs. The overall goal is to encourage repeat purchasing while providing a positive customer experience that shows them their business is appreciated. You can choose offers that benefit your overall business or help increase sales of specific products. Choose whatever you want at any given time, as many customer loyalty programs change over time to accommodate customer’s tastes.
Here’s a quick example of how your business can build your own rewards program for your existing customer base. One of the easiest ones is to reward one point per dollar spent, after a certain amount is accrued they get a discount, more rewards etc.
What are the different types of customer loyalty programs?
Cash Back Programs: Like it sounds, this program allows customers to receive cash for certain buying levels.
Discount Programs: Much like a standard sale, you can provide discounts on individual items or across the entire store. You can specify exact time frames to work with your POS system.
Frequency Programs: Like a paper punch card, the more a customer visits and shops in your store they build points towards a free reward.
Points Programs: Like cashback and frequency programs, loyal customers earn benefits the more they buy. These points can be redeemed as payment toward items or services.
Tier Programs: The more a customer buys, the higher the buying tier, encouraging them to build up to greater benefits. This program is a powerful marketing tool for upselling – particularly with high-priced merchandise.
Non-Monetary Rewards: Provide first looks at new products, birthday rewards, social media sharing benefits, and more.
As you can see, there are a large number of programs to choose from. For best results, offer multiple programs together, such as combining monetary and non-monetary rewards.
Why customer loyalty is important for small businesses
Loyalty is a magic ingredient for growth because the benefits of customer retention are huge. Existing customers cost less money to retain than if you were to find new ones – as much as 25 times less. They also buy as much as 67% more than a new customer. As a small business, a high profit for your marketing dollar is invaluable. A loyalty program is an affordable and effective way to do it.
There are other benefits, too. Loyal customers aid with word of mouth marketing – one of the most effective and profitable growth methods. Their support can result in a devoted following by like-minded customers who are more prone to buy due to trusting the recommendations of people they know and respect.
You also benefit from strong interaction with repeat customers. As your shoppers pop in and out, you and your teams can gain valuable business insights to better serve them – and other customers like them.
Strong service to your current customer base also helps keep your quality consistent by understanding your audience and consistently meeting their needs. Any work to creating happy customers further increases brand loyalty, boosting business with more reliable repeat business to help you navigate the ups and downs more easily.
Loyalty is invaluable to your growth, and this is why POS products often provide marketing tools to create loyalty programs. As a POS provider, we at BNG-Payments regularly include them in our list of offerings.
How small businesses can build big brand customer loyalty
Competing against large companies can be daunting. They have more locations to serve customers, more brand recognition, more marketing dollars, and perhaps even higher profitability margins.
But when you implement a loyalty rewards program, you stay competitive while exposing them to a more personal approach to service – something they can’t match.
Staying personal with your customers is huge for growth, and that means ensuring your business is designed to learn and understand your customers to provide them with what they need. Nordstrom is famous for its more personal approach to business and even wrote a famous book specifically on the subject called The Nordstrom Way.
By hiring employees who care about their service and understanding your shoppers, you strengthen your customer service in ways that ensure they keep returning and spreading the word. The more appreciated they feel and have their needs solved, the more they will return.
Loyalty programs are a strong benefit for frequent customers, and providing benefits that suit them helps you attract other loyal consumers like them. You can even implement a referral program to encourage current customers to spread the word to their like-minded friends. Your customers can act as your brand ambassadors, directly delivering your business card (sort of speak) to high-potential buyers.
The right tools also help. Today’s POS systems are far beyond simple payment devices. You can now store, analyze, and use customer data affordably, and that data is far better than that you would get elsewhere. Your active customers will continually purchase your products, so use their data to your advantage. Understanding purchase history leads to more intelligent and effective marketing campaigns and promotions to keep your customers – and other customers like them – coming in.
If you are a business with more than one location, consider using a system like Factor 4 Loyalty to track loyalty rewards across multiple locations. This expands the loyalty benefits by helping customers order wherever is most convenient for them. You can also track behavior and spot more desirable locations for specific deals to ensure better profitability across each store.
What to look for in a merchant account provider
Whether you run a brick-and-mortar retail store, restaurant, online business, or mobile sales business, loyalty programs are an effective and cost-efficient way to maintain and grow repeat business for reliable and consistent profits.
As a merchant account provider, we work with the largest and most reliable loyalty systems such as Factor 4 Loyalty, Restaurant Manager, and many more. We also provide all the needed hardware and payment solutions to make customizing and honoring your programs easy, with tight tracking to gauge the results.
Contact us to find out how your business can take advantage of customer loyalty programs.