How a Loyalty Rewards Program Can Benefit Small Business
By Ben Grossman | May 09th, 2022 | merchant processing, business tips, POS System, Loyalty Rewards, local business
You spend a lot of time and effort to get customers in the door. But what about getting them to come back? Turning a new customer into a repeat customer allows you to better leverage your efforts in getting them to come in the first place. One of your best tools to keep them coming is a loyalty rewards program. Currently, 72% of US adults belong to at least one loyalty rewards program. It's not something that's just for the big brands.
They offer benefits to even small businesses. And, they're easier to implement than many people realize. Take a look at how it could help your shop or restaurant.
A rewards program basically involves people who shop in your store points for every purchase. Those points accumulate and can be used for discounts or credit toward future purchases. You can add more ways to earn points such as signing up for an email or following the business on social media. You can also add more rewards such as bonus points for a certain kind of purchase or shopping during a special event. What matters is that the customer has an incentive to return to your business.
Offering a loyalty rewards program will help customers feel invested in your company, helping to build a loyal customer base.
As a small business, you actually have an advantage in this regard. A whopping 67% of consumers say that they prefer to support local businesses, so giving them a reason to be loyal can certainly be a boon for your business.
Relationships work both ways, and customers love being shown they are heard, felt, and respected. Offering them loyalty rewards for their purchases will help customers feel appreciated and build a positive association with your brand over time.
Digital marketing makes the options for getting new eyes on your business greater. But most marketers agree that word-of-mouth marketing is still the most effective marketing tool.
Offering positive reinforcement by rewarding your existing customers will only help facilitate new conversations about your business. It's also a great way to build your email list, social media followings, and website traffic if you leave prompts for these when customers sign up for your program.
Keeping track of metrics is essential to understanding your marketing strategy, target audience, and existing customer base.
With a loyalty rewards program, you can gather information about customers to better understand their buying habits such as:
Building and using metrics to make decisions about inventory, sales, and even product placement supports long-term performance and growth.
The loyalty rewards program gives people a reason to come back to your store. And, they're more likely to make additional purchases to take advantage of rewards they've built up or to build up rewards.
There are some challenges businesses when adding a loyalty rewards program. The key is to be aware of them and plan around them.
One of the greatest initial challenges is finding a balance between offering too much and too little.
However, what gets measured, can be managed. In only a few months you can find a profitable zone that keeps customers coming back for more. Tracking metrics will help you do this as quickly as possible, and give you data that helps you make further improvements.
Loyalty rewards are abundant, but more than half of reward members are inactive on average. But this isn’t as big a deal as it may seem. If you’re only spending money on rewards for the customers that sign up, then it still works out in your favor.
Regardless, if you want to solve this issue, you can leverage the data you receive from your active members and tailor your program to meet their needs.
In some campaigns, customers may be loyal to the discount or the prize, not the brand. Generally speaking, offering the right rewards will help with this, as some limited campaigns (“Spend X to get a free X”) may not drive long-term sales.
There are several ways to implement and track loyalty rewards. Punch cards for brick-and-mortar and algorithms for online products are just two options. There are also websites that can keep track of your rewards programs entirely for free, especially for cash-back or points systems.
Of course, you can always develop a mobile app with customizable features, but these are expensive to develop. Here are some more affordable ways for a small business to track a loyalty rewards program.
If you do a lot of business online, having customers use their email can allow for personalized deals sent to them. Otherwise, they can give their email or phone number at the checkout (in-store) and you can save their purchase history over time.
Rewards cards are an easy way to personalize customers’ data, as they can easily swipe and forget about it. If you already have a credit card reader, you may be able to talk to your merchant processing company about adding a rewards card feature or cashback option.
Now that you know some of the benefits of offering a loyalty rewards program to your customers, why not put these tips to use? It’s easy to start and the benefits are long-lasting.
Stay up to date with our latest small business tips and feel free to contact us with any questions or for help with your new program!