One of the best ways to grow your customer base is to reward them. Not only does a loyalty program provide a practical reason for continuing to buy, but it also provides information about your customers that allows their needs to be met more efficiently and effectively.
If your small business has not yet considered introducing a customer loyalty program, now may be the time to start developing one. "Finding Benefits in a Small Business Loyalty Program" is the latest infographic from Merchant Warehouse and details both the benefits retailers can see from a successful loyalty program as well as various loyalty program options available today.
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A loyalty rewards program accomplishes two goals. First, offering rewards to your customers encourages them to continue to be your customers. Second, it helps you learn more about what your customers need so that you can provide it for them. If your small business does not currently operate a rewards program, you will find that starting one will be highly beneficial to you.
As the market becomes saturated, it becomes necessary for retailers to concentrate on their existing customer base, and a loyalty program gives you the opportunity to do that. Rewards encourage previous customers to return to your store, and over a period of time, your revenue and processing volume begins to increase even though your customer base may not be growing. In addition, retailers must spend six to seven times more money on advertising that targets new customers than the amount they spend on a rewards program. Simply put, as your revenue increases, your expenses go down.
A loyal customer spends 67 percent more money in a store than a new customer does. Research has also shown that in five years, if you have a 70 percent retention rate, you will have lost two to three times as many customers as someone who has a 90 percent retention rate.
Increasing Your Customer Base with Rewards Programs
Rewards programs are not just for existing customers. It’s also possible to increase your customer base with rewards as 82 percent of small retailers have already learned. Further research has shown that a brand’s market share increases by 20 percent when the retailer offers a rewards program.
Other Benefits of the Rewards Program
With a designated rewards program, you have the ability to tailor your prices toward your existing customers. These programs make it easier to manage your inventory and to gather useful information on your clientele. Lastly, studies in this area demonstrate that customers increase their purchases by 10 percent with loyalty programs.
Statistics Associated with Rewards Programs
The following statistics show that people are definitely influenced by the rewards programs that stores implement. For example, 69 percent of customers who take advantage of a rewards program decide to shop at a store based on where they can earn rewards. Also, 80 percent of those who participate in loyalty programs believe that it is worth the time engaging in this activity. A full 70 percent believe that they are cultivating a relationship with a company when they take part in loyalty programs, and this benefits your brand.
What Do Customers Want in a Rewards Program?
Your customers have precise ideas of what they would like to see in a rewards program. If it is easy to sign up for it, 22 percent of your customers will do so. A majority of 51 percent prefers monetary rewards, and 36 percent are looking for exclusive discounts and coupons. Finally, 55 percent of people want it to be easy to use their rewards.
The Use of Social Media
Since most people take advantage of the Internet, a website would be very useful to your business, and you will receive more visitors if there is a rewards program. When asked this question, 84 percent of respondents attested to this. Also, 75 percent of respondents stated that they would switch their loyalties to your brand if you send them text messages advertising good deals to their iPhones.
Types of Loyalty Programs
- The Membership Card: This program will be most effective if you only advertise the rewards to and track the purchases of those who are in the club.
- Reward Your Favorites: These are the people who spend the most money in your store. You can present them with invitations to join your exclusive club.
- Email Newsletter: Make your customers feel special with a newsletter that is highly informative and contains facts about new products and coupons.
- Gift Cards: Gift cards encourage people to spend more money than they ordinarily would.
- In-Store Sales: A discount of 10 percent for $100 spent will encourage people to shop now if the coupon has an expiration date.