How to Know if Your Business Could Benefit From a Customer Loyalty Program
Customer loyalty programs certainly aren’t a new concept, with the first punch cards popping up in the 1980’s. However, they are on the rise. In fact, U.S. consumers hold 3.8 billion memberships in customer loyalty programs. Additionally, nearly 60% of companies listed upgrading their customer loyalty software as a top priority in a recent survey.
Customer loyalty programs, and digital ones at that, are growing in popularity. But should your business hop on board and establish a customer loyalty program? Below are a few considerations when deciding whether or not a digital customer loyalty program is right for you.
Signs a Customer Loyalty Program Could Boost Your Business
There likely isn’t a single business on this planet that wouldn’t benefit from more loyal customers, but there are a few factors that make your business more (or less) likely to benefit from a digital customer loyalty program in the short run.
You sell goods or services that aren’t big-ticket items
Customer loyalty programs work best for items or services that are purchased more than a few times a year. For example, while a realtor wants to have clients that come back again and again and refer their services, it’s unlikely a realtor would work with the same client more than once or twice a year.
On the other hand, businesses such as cafes, cleaning services, convenience shops, coffee shops, boutiques, and more are great candidates for digital customer loyalty programs. That’s because a customer at one of these businesses realistically could visit and make a purchase once a month or more.
You’re spending a lot of time, money, and effort acquiring new customers
Bringing in new customers can be hard (and expensive) work. In fact, on average, acquiring a new customer is five times as expensive as retaining an existing one. While you’ll never be able to completely eliminate the task of bringing in new customers, if you feel it’s taking up too much time you’ll want to consider a loyalty program. By setting up a process to keep current customers more engaged you’ll have less of a need to find new customers in order to sustain and grow your business.
You want to increase revenue
This seems like an obvious one - what business owner doesn’t want to increase revenue? When it comes to raising the bottom line there are three main ways to make it a reality: get more customers, make what you sell more expensive, or get existing customers to spend more.
While slapping a higher price tag on your goods or services may seem like the most straightforward way, you might be met with resistance. Loyalty program members spend up to 20% more than non-loyal customers, so turning your attention to building up your customer loyalty program can be lucrative.
You want to understand what your customers react to, and who your top customers are
One advantage of mobile customer loyalty programs over traditional punchcards is data. With a mobile loyalty app, you’ll be able to track top customers and the number of new loyalty program sign-ups.
Data-driven loyalty apps also keep track of what reward offers are being used, and how long it’s been since a particular customer has visited. While the term “data-driven” can sound intimidating, it doesn’t have to be. Simple-to-use apps and automatic reminders mean your business can do more to engage with customers with less work on your end.
You want a way to communicate directly with customers
Mobile customer loyalty programs with push notifications and text messaging offer another way to communicate with customers. On top of your social media channels or face-to-face interactions in store, mobile loyalty programs give you a chance to tell customers about sales, events, or new products. Plus, text messages about events and promotions sent to customers have a 98% average open rate.
How to Choose a Customer Loyalty Program
Different customer loyalty programs, whether they’re a punch card or a mobile app, have their own pros and cons. Ultimately, it’s up to you to decide what’s important for your business and what will be most enticing for your customers. After all, a customer loyalty program that your customers won’t touch isn’t worth your time.
Some factors you may consider when choosing a program include:
- How long does it take to set up?
- How easy is it to maintain?
- How will you promote the program and rewards?
Sparkage offers a simple way to get a customer loyalty program up and running quickly. Plus, your customers will never forget it at home, since their customer loyalty profile and rewards can always be accessed from their smartphone. Want to see Sparkage in action? Request a demo to learn about our features, setup, and how a customer loyalty program could benefit your small business.