From Starbucks to Best Buy to your local grocery chain, loyalty programs are a popular way to reward loyal customers and keep them coming back for more. Many big stores credit their loyalty programs for increased revenue and profits, which is great, but can such programs work for small businesses too?
The answer is yes. While some small businesses shy away from loyalty programs because of the perceived expense and logistics of such programs, the fact is they pay off in the majority of cases. In a 2013 study, 64 percent of small business owners with loyalty programs said the profit from their loyalty programs outweighed the costs.
For one thing, repeat customers spend more than new customers – an average of 67 percent more. So finding way reward those customers you’ve already “won” and keep them coming back for more is a good financial move.
Not only that, but loyalty programs are all about engagement with customers, which can be incredibly valuable no matter how big your business. When customers sign up for loyalty programs, they often provide information such as their mailing address, email address and phone number, which not only offers marketing potential, but also allows you to measure and understand customer behavior. The learnings you can garner from this information can provide invaluable insight and allow you to shift your strategies to better meet customer needs.
Also, loyalty programs no longer have to include punch cards or other physical cards that can be costly to manufacture and open themselves up to fraud. Mobile apps and virtual cards make implementing them not only inexpensive but easy and also allow you to customize them for your customers. The programs can be linked to customers’ social media accounts as well, allowing them to promote sales and other special offers on them, which equals free advertising for you.
Finally, people just like being rewarded and getting something for free or at a discounted rate. In fact, one study shows that consumers say they’re 81 percent more likely to shop at a business that has a loyalty plan.
The bottom line: customer loyalty programs do just as their name promises – build customer loyalty. And for small businesses, there are few things more valuable than that.