Loyalty is a common buzzword when it comes to small businesses. More often than not, your company’s success is gauged by the number of dedicated customers you have who repeatedly purchase your products or services. Statistics show that it costs a business between 5 and 10 times more to gain a new customer than to sell to an existing one. The math is simple – keep your existing customers happy and you will increase profitability.
Whether you’re trying to create a loyal customer base or simply maintain the loyal customers you already have, incentives and rewards can go a long way to setting you apart from the competition. In today’s segment, we’ll look at the benefits of some of the most popular types of loyalty programs and how they assist in a) attracting new customers, and b) keeping them happy for the long term.
Common Loyalty Programs
This type of loyalty program provides customers with buying incentives in the form of accumulating points. In most cases, customers can redeem collected points at their own discretion in exchange for rewards. The more a customer purchases, the more points he or she earns. The more points, the better the prize. Benefits for businesses: a points card may be the very tool separating a company from its competition. Many buyers love knowing that for each and every purchase they make, they are earning something in return.
Tier programs may also rely on points, although these are enhanced by the addition of increasing levels. For the majority of tier programs, a customer moves up levels (or “tiers”) based on the frequency and quantity of purchases. For example, a person who uses a certain airline to travel once or twice a year may have a basic loyalty card, while an individual who travels weekly for business may have a gold or platinum level card. In addition to rewarding a customer with points, tier programs usually provide complementary incentives, such as preferred seating or double the points for advanced members. Benefits for businesses: With the possibility of the next highest tier acting as an incentive, tier programs encourage active customers to stick around for the long run. A gold member who is on the cusp of becoming a platinum member is unlikely to switch to another company.
Have you ever been blown away by a company’s performance? If so, you’ve likely spread the word to your family and friends. Many businesses feature referral programs that actually reward customers for their word-of-mouth recommendations. Prizes may come in the form of gift cards or special discounts. Benefits for businesses: referral program benefits are twofold. Firstly, they spur new business through positive reviews. Secondly, customers who refer often get rewarded whether or not they’ve made a recent purchase. A “random” reward from your company reminds current clients to continue buying.
Does your company have a loyalty program in place? If you’ve found that even your top-notch customer service isn’t enough to encourage a strong base of repeat buyers, then a creative loyalty program may be the lifeblood your company needs to stay competitive. Consider trying one today.