What Small Businesses Can Do to Encourage Customer Loyalty
By Emma Sturgis
Businesses need customers. As part of the relentless sales cycle, companies devote much time and money to customer identification and acquisition, so maximizing the return on investment of that process makes sense. Studies have demonstrated that retaining an existing customer costs less to keep than acquiring a new one. Similarly, some statistics show that a small fraction of repeat customers account for the majority of sales. After recognizing the value of customer retention, many companies have become interested in encouraging customer loyalty. As a result, the cost of making a sale decreases as profits increase. The following ideas for developing a customer loyalty strategy can help businesses create such a win-win situation.
Understand the Benefits
Customer loyalty programs provide incentives for customers to return to buy again from the same store. Such efforts depend on a positive customer experience that makes buyers feel desired and valued. In exchange for a voluntary registration that usually includes the name and email address of shoppers, businesses offer an incentive for repeat business.
The information obtained from customer loyalty program facilitates marketing efforts. Company newsletters, for example, keep the business visible to customers between visits, helping to inspire them to utilize their loyalty membership. Similarly, low-cost email marketing campaigns to customers can nudge buyers to return.
Use Creativity and Simplicity
Companies should go out of their way to building a unique and innovative loyalty program, but they must keep it simple. An easy to understand and easy to use loyalty program will have the best chance of success. If shoppers need to jump through too many hoops to enroll or do not understand the way the program works, the program could backfire and cause negative sentiment. Communicate with your customers on their level to promote a sense of comfort and low stress. With an instant messenger for business, you can answer customers’ questions with the convenience of mobile messaging. This kind of laid-back interaction is a simple way to show your customers that you value their time and lifestyle demand. Creative, simple, and accessible solutions will generate loyalty as well—if not better than—complex, intimidating loyalty programs and high-pressure interactions.
Make Customers Feel Special
When customers opt into a loyalty program, they should feel like they have become part of an inner circle with special privileges. Some companies decide to limit membership to customers with a certain level of sales. A membership card can remind customers of their sense of belonging every time they pick up their keys or open their wallet.
Decide the Structure
Ideas for the structure of a loyalty program usually focus on giving people something for free or at a lower price. For example, a program that gives customers a free item after they buy nine works well. As an alternative, businesses can decide to give loyalty program members a discount every time they shop. Other ideas include the creation of a club that makes unique merchandise available only to program members and contests that give shoppers an extra entry in a monthly giveaway drawing every time they check out.
Businesses that recognize the value of customer loyalty should implement a strategy that inspires repeat business. When properly designed, a loyalty program makes customers feel special and gives them a reason to buy again. The program also gives businesses an easy, low-cost way to market to customers via email or direct mail.
Emma Sturgis is a freelance writer based in Boston, MA. She writes most often on education and small business. Say hi on Twitter @EmmaSturgis2.