Loyalty should be rewarded
All SMEs face a constant battle to keep themselves in the hearts and minds of their customers. The trouble is that in a crowded and competitive marketplace, consumers are aware that they can be as fickle and capricious as they like. If your enterprise isn’t giving them enough of what they want, it’s only a matter of time until they take their business elsewhere.
In an era where competition is both rife and cutthroat, it behoves SMEs to do all that they can to incentivize loyalty among their customer base. It’s likely that you’ve considered implementing a loyalty program. Perhaps you’ve decided against it citing prohibitive costs or logistical hurdles that it’s not worth the effort to overcome. However, we’re here to tell you that a loyalty program is well worth investing the time, effort and capital to implement for the following reasons...
It’s far cheaper to retain an existing customer than to chase a new one
This won’t be new information to seasoned entrepreneurs but it’s worth revisiting for the newbies on the back row. It costs up to five times more to engage the attention of a new customer than it is to retain a customer who has used your business before.
While your overarching business strategy should certainly be devoted to engaging new prospects, setting your sights exclusively on a demographic with an inherently lower conversion rate is simply wrong-headed.
Loyalty programs help to improve customer retention and contribute towards a long and profitable relationship with your customers. Without one, your retention rates will suffer and you’ll feel as though you’re constantly investing your efforts and capital into chasing after new clientele.
Loyalty programs can gamify transactions
This may be a bitter pill to swallow but… Nobody likes doing business with you.
Don’t get us wrong. There are things about the business they like. They like your employees, your products and the experience you offer them, but the actual transaction part… Not so much.
The great thing about loyalty programs (and particularly loyalty apps) is that they can be used to gamify the transaction process, making it easier and more enjoyable. For example, readers who use the Starbucks app know that in order to get free drinks, one has to accrue little stars in a digital approximation of a coffee cup. Typically one purchase gets you one star, but the coffee giant will occasionally have offers whereby members can double up on their points.
Accruing these points makes the loyalty program fun and more like a game for the user. Speaking of loyalty apps...
A loyalty app can help to drive new business
Sure, a loyalty app will require some time and cost to develop. However, merely having a branded app can be useful in driving new business. When you have an app for sale on the Apple or Android app store, your brand comes into contact with a global market of millions of potential customers. When combined with a beautifully designed and eye-catching logo, a loyalty app can go a long way towards generating positive attention for your brand.
What’s more, if you can get your app featured, the interest in your brand could increase exponentially.
It keeps customer experiences positive
Positive customer experiences go a long way towards driving loyalty. The more value they feel that they have gotten from the transaction, the more likely they will regard the experience as a positive one. Let’s not kid ourselves… In a competitive climate, we need to try and ensure that all of our customer experiences are positive. According to Forbes, almost 80% of online customers will turn to a competing brand if they experience poor customer service in the first week. Implementing a loyalty program goes a long way towards keeping the customer experience positive and ensuring that they walk away from the transaction (whether physical or digital) feeling that they have gotten great value from you.
They can be used to incentivize desired consumer behaviours
Customers will always give a little when they get a little. Your loyalty program can not only be used to drive loyalty, they can be used to influence consumer behavior to achieve desired outcomes.
Let’s say you have a product in your inventory that’s flagging in sales. If you have access to your loyalty program members via email shoots or push notifications, you can use these to alert them to an exclusive promotion offering them a special discount on your ailing product. Not only are you offering them (for example) 20% off the unit price, you’re also giving them 100% extra value. While you might take a small hit on your profit margin, you’ve cleared the shelves of a product that was hitherto gathering dust and freeing up some essential liquidity.
What’s more, this influx of interest can also be used to drive upselling and cross-selling opportunities.
By this same token, giving customers exclusive windows of opportunity in which they can double their points or rewards can help to boost traffic in traditionally slow periods.
It can provide useful market research
Offering a loyalty program allows you to keep a finger to the pulse of your customers’ needs and desires. Through trial, error and keeping a close eye on your metrics and KPIs you can determine which promotions and loyalty offerings are attuned to the desires of your customers and which do not resonate as strongly. The data you glean from loyalty members can serve as a useful microcosm of your customer base as a whole.
If you don’t have one, they’ll turn to a competitor who does
Finally, if you need a further incentive to adopt a loyalty program, consider the likelihood that even if your competitors do not currently offer reward programs, it’s likely that at least one of them will in the future.
When that happens, why should they favor your brand over a brand that’s generating more value for them per transaction?
The sad truth is that even if you offer outstanding customer service and a superior product to that of your competitors, if they at least perceive that they’re getting better value elsewhere they’re unlikely to stick around.
With so much to gain and so little to lose, you need a seriously good reason not to at least attempt putting a loyalty program in place.