Did you know, on average, it costs five times more to attract a new customer than it does to retain an existing one? Have you also heard there is a 60 percent to 70 percent chance of making a sale to a current customer, but only a 5 percent to 20 percent chance when trying to sell to a new prospect?
More and more, small businesses are realizing the value of loyal customers and repeat business to stay ahead of the competition. For more on customer loyalty programs, keep reading.
Customer loyalty programs: The basics
What exactly is a customer loyalty program? Essentially, a customer loyalty program rewards loyal customers for their business. Rewards come in many forms—store credit and prizes, for example. A good loyalty program can bring several benefits:
- Increase sales: Loyalty programs generally provide customers incentives—some on a sliding scale—to make a purchase. In other words, when customers get a greater reward for a larger purchase, they tend to buy more. It’s important to note that the rewards you offer must line up with your customers’ needs and wants. For instance, a golf pro shop may consider rewarding purchases with Callaway® gift cards—the more a customer spends, the greater the value of the gift card. A travel agency could offer tiered, vacation-related gifts ranging from luggage tags to wheeled duffels.
- Enhance reputation: Customers like loyalty programs. When you reward customers for their patronage, it sets you apart from the competition and shows customers you appreciate their business.
- Retain customers: Happy customers are loyal customers. And loyal customers are more likely to come back and even recommend your brand to others. This works for new and seasoned patrons alike.
- Get more for your money: Remember when we said attracting new customers is five times more expensive than keeping existing ones? Loyalty programs are an inexpensive way of doing just that. The benefits outshine the expense with new and increased business.
There are several options available for managing your loyalty program. For instance, offer a discount to participants when they use their members’ only shopping bag. Or hand out punch cards that earn them a reward after a specified number of purchases. You can also take advantage of digital solutions, such as Belly® or Punchcard®, to track customer loyalty. These customer loyalty apps do the work for you by tracking awards earned for purchase behavior. A simple Google® search will serve up countless other digital solutions, too.
Customer loyalty is a virtue you don’t want to pass up. Loyalty programs can help increase sales, enhance your brand’s reputation and improve retention—at a fraction of the cost of drumming up new business.