The answer to this question in short yet bold is, YES. Because it can cost anywhere from 5-10 times more to acquire a new customer than to retain an existing one. Then, why would you not use every tool available to keep customers coming back? In the increasingly competitive and fast-paced economic environment of today businesses that are able to stay in touch and interact with their customers when and how their customers want are giving themselves a huge advantage over their competition.
If you are a small business owner this should not come as a shock. We all know that a repeat customer is the best customer, spending on average 67% more on a given purchase than a new customer. Repeat customers are also the best form of advertising, spreading the word for you and bringing you more business. Obviously, you need to do what you do best and provide an excellent product/service and a first-class customer experience, this goes without saying: but in this day and age consumers are fickle and you need more than just a great product or service in order to compete. You need to stand out from your competition and give your customers what they want to keep them coming back and incentivize them to spread your gospel.
Many big businesses already use customer loyalty programs and know that they work. In 2019 Starbucks reported a 26% rise in profit and an 11% jump in overall revenue due to its My Starbucks Rewards program. Conversely, nearly 7 in 10 small businesses do not have a customer loyalty program.
The task of developing your own loyalty program can seem like a daunting one, but the payoffs are considerable. For small businesses that already have a customer loyalty program in place, 64% report that it has been cost effective, meaning that it makes more money than it costs to operate. A well- designed and well-implemented customer loyalty program can help drive customer retention and repeat sales. According to the “Loyalty Effect”, a 5% increase in customer retention can lead to a 25-100% increase in profit for your company. This is because existing customers that have an affinity with a brand are easier to up-sell and cross-sell to; there is a relationship, a measure of trust already established.
In today’s fiercely competitive climate many consumers would rather support a local small business over a big chain, but decisions are often made based on price and the extra value customers receive from rewards programs offered by the big chains. The more that small businesses can offer and communicate extra value to their customers, the greater their market share and the more they are able to retain customers and stay competitive.
If you are a small business owner asking yourself what do I do? How do I attract new customers and retain existing ones? How can I afford a customer loyalty program? You must also ask yourself, what are the costs of not having a customer loyalty program? How many customers am I losing to another business every month? How much am I losing in sales? A customer loyalty program doesn’t have to cost a fortune. In today’s digital era there are many cost-effective rewards programs designed for small businesses.
If you own a small business and are looking to stay competitive it is important to consider a customer loyalty program for your business. A well-designed program can help you retain customers, expand your customer base, develop lasting customer relationships and increase sales.
Quick Tips To Achieve This Include-
1. Keep track of your customers. Use a database or CRM customer relationship management software to keep track of regular customers and their purchases. This will help you learn about their preferences and provide information you can use to tailor personalized offers. Signing up customers to your customer loyalty program is a great way to do this and allows you to start collecting basic information: once they are part of your program you can also send out customer surveys and questionnaires online and start regular communications. This will further help you develop a relationship with your customers and learn more about your target market.
2. Ask customers how they found your business. This may sound simple, but it is often overlooked. When you ask customers how they heard about your business you can keep track of what seem to be the most effective methods of promoting your company. This is where you should put more advertising effort and spend less on other avenues.
3. Thank your regular patrons. Don’t take your regular customers for granted. We don’t need to look far in Canada to see the toll this kind of entitled attitude has taken on retail giants such as Eaton’s, Woodward’s, etc. Thanking your customers in person is a first and important step, but rewarding them with actual money, discounts and personalized offers goes a long way to keep them coming back.
4. Ask customers if they would be a reference for your business. Ask customers “would you recommend us to a friend or family?” If people are willing to refer your business to a friend or family then they are putting their own personal reputation on the line. This can be an uncomfortable thing to ask for some business owners, but it is also a good indicator of your customer satisfaction level. If customers are satisfied with your company’s goods and/or services then they will be happy to give you names of people that they know who they think might also benefit from your products. Another good thing to do with customer referrals is to ask them if they will post them on your company Facebook page and share them with their friends online.
5. Thank your current customers for their referrals. This can be done in several ways: you can thank customers in person, send them a note or email, or offer them a discount or even a referral fee, depending on your business. The main thing is that you thank your loyal customers and reward them, especially the ones that are spreading the word and helping you grow your business-those are gold, treat them as such.
6. Communicate with your customers. Email is one of the easiest and most cost-effective ways to communicate with your customers. Start with your existing customer database and create a steady stream of regular communications and special offers. Make sure that you incentive new customers to provide you with their contact information and provide them with special offers. Your customer loyalty program software should make this process quick and easy and allow for personalization as well as generic communication. Engaging with your customers by email is a great way to keep them interested in your business and learn more about them.
Facing the challenges of operating a small business does take time and effort. The six steps highlighted in this article offer no magic solution to business owners struggling to survive, but they do offer sound business advice on how to improve your customer loyalty and help your business succeed in today’s highly competitive business environment.