Most advice for small and middle market business owners revolves around attracting new customers. But what about the ones you already have? Loyalty and rewards programs are a great way to encourage customers who have good experiences with your company to keep coming back.
After all, loyal customers are the lifeblood of your business. They tell their friends about you and keep you afloat when you're not spending lots of time and energy on marketing efforts. It never hurts to help them feel appreciated.
Why Offer Customer Reward Programs?
Customer reward programs help you connect with your loyal customer base, which can help you increase sales, generate more word-of-mouth referrals and ultimately help you build your business. The following statistics demonstrate the importance of loyal customers:
The average loyal customer is worth up to 10 times as much as their first purchase, according to Help Scout.
You have a 5 to 20 percent chance of selling to a new prospect, but a 60 to 70 percent chance of selling to an existing customer or client, according to Forbes.
Fully engaged customers — people who have a strong attachment to a brand — tend to spend 23 percent more than the average customer, according to Capgemini.
Choosing a Customer Rewards Program
There are many ways you can implement customer reward programs for your small business. Here are a few popular choices:
- Frequent visitor cards: Frequent visitor cards reward customers for using your services, and they're a great choice for brick-and-mortar businesses. For example, a coffee shop might offer a frequent visitor card that gets stamped each time someone buys a cup of coffee. After they make seven purchases, they get one free.
- Point collection: Many companies take it up a notch and allow customers to collect points that can be redeemed for prizes. Sephora, a major beauty retailer, encourages shoppers to buy more products through their point collection program. Customers can redeem their points for exclusive makeup samples.
- Referral programs: If you get a lot of customers through word-of-mouth, or want to encourage more conversations about your business, then create a referral program. The best referral programs reward both parties, the person who brings in a new customer and the new customer themselves. If they both earn 20 percent off their next purchase, you've virtually guaranteed two more sales.
- Online and social media programs: In today's digital world, it's a good idea to incorporate online marketing into your rewards programs. For example, many businesses reward customers when they post photos on a social media site, such as Instagram, with a particular hashtag. Customers might get a coupon for 20 percent off simply by sharing their experiences with your products on social.
How to Implement
It's relatively easy to create frequent visitor cards or referral programs, though other loyalty programs such as point collection may require a software solution. No matter which loyalty program you choose, a well-implemented program can help encourage future customer engagement.
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