How do we create customer loyalty?
Often, a customer is drawn to a brand or SME by a specific product or service. For small-to-medium sized businesses, it can sometimes be a challenge to encourage customers to stay or return as they cannot afford to compete with the lower prices offered by big name brands. According to research conducted by KPMG, 74% of respondents stated that good quality products or services keep them loyal to their favourite brands. 66% stated they would stay loyal if they felt the business was good value for money. One-way SMEs can offer their customers value for money is through a high-quality, loyalty rewards program.
There are several different types of loyalty programs your business could consider implementing, from the simple rewards card that gives customers points for every purchase to the privilege loyalty program with subscription fees that offers customers personalised discounts, content, or services. The more complicated systems would require more of a financial investment to establish, but SMEs can start with a low-cost stamp card that offers customers a discount or bonus product when completed.
So, what are the benefits of setting up a loyalty and rewards program?
81% of millennial shoppers say that being a member of a loyalty/rewards scheme encourages them to spend more money with that company. This can help SMEs avoid the price competition and comparisons with larger franchises by encouraging a superior customer experience. Giving customers rewards for their repeat business creates an emotional connection between them and your business, showing that you appreciate their support and that they are valued by the business.
A loyalty program can also help you collect valuable data on your customers and assign them a customer lifetime value (the net profit attributed to a specific customers repeat business). The data you collect allows you to better tailor your rewards for each person, building a more personal and effective customer relationship. If a customer appreciates the products, service, and rewards you are providing, they are more likely to recommend your business to friends and family, creating advocates that help bring in new customers.
The data you can collect from your rewards program can go on to inform your future marketing strategies and product creation. Understanding your customer’s purchase history, activity, referrals, or discount usage means you can easily identify which types of rewards are most popular and what offers are working best to keep new and old customers coming back. An advantage SMEs have over larger brands is their ability to better customise their service for each customer, understanding what values their customers might have that you can better embody, such as sustainability, charitability, or incredible customer service.