It’s estimated to cost as much as 25 times more to acquire a new customer than to retain a current one. Not to mention that existing customers are far more likely to spend more at your business than new customers — approximately 67% more.
That alone should convince small business owners of the importance of customer loyalty programs. But if you need some more persuading, we’ve got ten quick reasons why SMBs should consider integrating a customer loyalty program into their business model.
1. Gather Better Customer Data
The biggest benefit of any customer loyalty program is the high quality of data associated with having customer purchases synched into an organized system. Instead of playing a guessing game about how new and existing customers are spending money with your business, a customer loyalty program can provide insightful analytics into their shopping habits. This valuable data can help you better market specific products or promotions to your existing customers, based on their individual spending habits.
2. Drive More Sales
Loyal customers are more likely to spend more money at your business. That much we’ve established. The next key to boosting sales though is to provide a customized shopping experience. Customer loyalty programs give you data that can then be used to better pinpoint what your customers are most likely to do. This can create a stronger sales strategy that has a better chance of increasing sales and driving up ticket size.
3. Measure Loyalty Value
Along with all the data gathered from customer loyalty programs, having a program in place also provides you with the ability to measure how valuable each individual customer is to your business. From how much a specific customer spends annually, to how frequently they’re shopping, knowing more about your customer’s purchasing behavior can help you connect with your most engaged fans. This continuous data feed will enable you to refine your loyalty program to ensure you are reaching your top customers as efficiently as possible.
4. Connect With Customers
Reaching customers who have happily given you their contact information is far more effective than cold outreach. Instead of creating marketing and sales campaigns targeted for people who may or may not engage with your business, a loyalty program provides your business the tools to directly reach out to the customer who are more likely to buy again from your business. This cuts down on the number of dollars you need to put toward customer remarketing strategies and enable you to focus on your most valuable relationships. Instead of generic communications, loyalty programs help you to pinpoint which customers will be most attracted towards specific promotions.
5. Attract New Customers
In order to scale your business, you need to continually attract new customers. A great way to do this is by offering something of value in exchange for them shopping at your business. Offering rewards for joining your loyalty program will help encourage potential customers to give your company or products a shot. This will also provide you with more contacts to add to your marketing list.
6. Offer New Perks
The best way to test out a new promotion is to leverage the power of a customer loyalty program. Perhaps you’ve got a new product or service you want to introduce. Marketing this to customers who’ve already interacted with your business increases the chances of your success. The beauty of a loyalty program is it will continually evolve to meet the needs of your ever-changing customer base. Want to offer a new perk? Loyalty programs are built with flexibility in mind.
7. Boost Revenue
Increasing sales is the most obvious way to grow your business. But driving new sales is more than just attracting more customers. It’s important to help encourage your current customers to spend more with your business and attract new customers to do the same. Loyalty programs are a great way to motivate your customers to stay connected with your business. Giving them a great reason to spend more by using a special promotion, for example, will create a positive shopping experience and help increase your bottom line.
8. Create Brand Ambassadors
Happy customers love to talk about their experiences with their favorite brands. Businesses that want to better connect with their customers should consider where a loyalty program fits into the mix. Brand ambassadors can be encouraged by delivering a customer experience that delights, and even surprises. Loyalty programs allow businesses to keep customers happy with surprise sales and regular promotions to keep them engaged with your brand. This is the quickest way to get your customers talking to new potential customers about why they shop at your business.
9. Achieve Cost Savings
As we mentioned, it can cost up to 25% more to attract a new customer than to retain an existing one. Loyalty programs provide your business with the right tools to nurture your current relationships, instead of spending more money on finding new customers. Loyalty programs are a small investment of resources when compared to the many benefits associated with having a loyalty program for your business.
10. Gather Valuable Business Insights
Customer loyalty programs help your business know significantly more about your customers. This is an invaluable tool that will help craft your sales, product and marketing strategies. Empowered with real-world insights from actual customers, customer loyalty programs give you the ability to efficiently gather valuable business data that can help your entire team create better customer retention and acquisition strategies. Long-term, that’s a win-win for you and your customers. Better business insights mean better-marketed products. The end result? Connected, and satisfied loyal customers. A win-win, indeed!
