Every small company should aim at having loyal customers. This means even a slight increase in customer loyalty can deliver a high return in the form of increased profits. Actually, there are many ways to encourage customers back to your business. One of these ways is through loyalty rewards programs. According to a study by Reuters, over 80% of U.S. adults belong to a loyalty program. Here are some key benefits of a loyalty program.
1- Build Relationships with Existing Customers
Every small business can improve its customer experience. According to one survey, many consumers find it more beneficial to work with small retailers than a large company. One of those benefits is that it’s easy to form relationships with small entrepreneurs. Furthermore, the preferences of many consumers are supporting small entrepreneurs.
Therefore, loyalty programs are an added advantage to these benefits and give shoppers another reason to build their relationship with your brand. According to the Bond Brand Loyalty Report, 71% of consumers in the U.S. find loyalty programs a significant part of their customer relationships.
When you offer consumers special promotions and a thank you gift, they feel appreciated and valued even if they don’t make a purchase. This also increases repeat purchases. In fact, studies reveal that after getting a free gift, many consumers are likely to buy from that business in the future.
2- Increase the Average Order Value
One of the main aims of any businessman is to boost revenue and profits. The best strategy for achieving this is increasing the average order value (AOV). You can increase the AOV by implementing a loyalty program. What’s more, consider offering incentives like free shipping for orders that are above the AOV.
Consequently, customers will spend more to get that valuable reward. Depending on your insights about customers, provide discounts they will love. Another key benefit of a loyalty program is that it motivates customers to spend more to qualify for the discounts.
Additionally, you can use a strategic VIP program depending on the amount a consumer spends. Create different tiers to inspire consumers to transact more to qualify for the great perks that come with tier membership.
3- Attract New Customers
Consumers draw conclusions from their shopping experiences. Your current customers will lead referrals to your doorstep depending on what you offer and other factors. However, consumers only buy from businesses that provide the greatest benefits to them. Therefore, the features of your products and services will either increase or decrease your customer retention rate.
Many customers like to focus on prices, discounts, bonuses, and the convenience of your business’s location. Hence, implementing a loyalty program provides numerous benefits like discounts and deals. This is likely to attract new customers, referred to you by your repeat customers.
For example, you may have a digital signage post in your stores that asks potential clients to sign up for your loyalty program. Make sure you develop a well-thought-out program to increase the chances of converting new customers.
According to Merckle’s 2020 loyalty barometer report, customers are willing to draft online reviews and refer their products to a friend so they can earn rewards from a loyalty program. Therefore, when you recognize and reward your brand advocates, you solidify your relationship with current customers and encourage them to refer their friends and family to you.
4- Get Ahead of Competitors
One of the things that keep businesses on their feet is competition. This is the reason you should be on the lookout for new opportunities so you can outdo your competitors. Many companies use pricing strategies to set themselves apart from their competitors. However, you can reduce prices so far before you begin losing money on sales. If you have something to offer other than the best price, you stand a chance to increase your customer base.
If there is one lesson to learn from the COVID-19 pandemic, it’s that online marketing has the potential to expand. This is because more and more brands are adopting this strategy to raise the standards of customer engagement.
As a result, their competition increases across all business industries. So, make sure your brand offers a unique loyalty program. For instance, you can invest in a loyalty program app that hosts your rewards offers. This allows consumers to decide where to buy based on the loyalty programs offered.
Another great idea is the use of reward cards. For example, you can use rewards cards to influence consumers to get groceries at your store. You will draw customers who want to save money with a better customer rewards system than what your competitors offer.
Every business must appreciate its customers. This not only helps create long-term relationships, but also promotes customer lifetime value. Introducing a loyalty program is one of the market strategies you can adopt to encourage customer retention and boost your profits.