According to Invesp, it costs five times as much to attract a new customer than to keep an existing one.
All business owners know the importance of attracting and retaining customers, but it can be tempting to focus on bringing in new business. While you don’t want to pause acquisition, keeping your current customers happy and loyal may be the more profitable choice.
Customer loyalty programs can be an excellent way to build a following and encourage customers to come back again and again.
In this article, we will explore the benefits of loyalty programs, when you might want to launch one, and how to get started.
Why a Customer Loyalty Program?
This marketing strategy rewards customers for purchasing regularly with your business. The rewards system will look different, depending on the program, but may include things like:
- Exclusive access to new products or events
- Free or discounted products or gifts
- Punch cards (Buy 10 Get 1 Free)
- Point systems or awards.
Customer loyalty programs aim to provide anyone who buys from you frequently extra value and build a better relationship with them. It can also help you increase your profit margins, build a stronger brand, and gain more insight into customers’ wants and needs.
Choosing the Right Time for Your Customer Loyalty Program
There’s no specific time of year or time in business to launch a rewards program. The right timing for you will depend on a range of factors, like your business’s financial situation, customer base, and competition.
You might want to consider launching a loyalty program soon if:
- Your business is experiencing an overall drop in sales or retention. Declining sales are usually a good indication that your current marketing methods may not be effective. A rewards program can help you build more cost-effective revenue streams, though it shouldn’t replace acquisition entirely.
- You’re having trouble connecting with your target audience. Maybe you’ve recently launched a new product line, introduced a new service, or are dealing with a shift in consumer behavior. A loyalty program can help you get into customers’ heads and personalize their experience.
- Your business needs to stand out from the crowd. Looking to separate yourself from the competition? A rewards program can provide that extra value other small businesses in your industry don’t.
How to Get Started
Customer loyalty programs work best when they’re based on a well-researched strategy, with complementary tools and goals to ensure their success. Give yourself a few months to build and test your program first before unveiling it to your customers.
Think about how you want to strategize your program’s main elements:
- Name and description: Pick a catchy title with a story that captures customers’ interest without giving the game away.
- Platform: Will your loyalty program be digital, or do you want to bring people to you in person? Consider your end goal.
- Structure and reporting: You’ll need a data strategy to house and manage all the data you collect about customers and key performance indicators (KPIs) to measure the success of your program.
- Rewards and/or tiers: The whole point is to keep customers engaged. Rewards can be as simple as a punch card or as complex as a multi-channel game with levels and prizes.
Remember to consult your business calendar before you set a launch date. If you have seasonal sales or regular events, you may want to plan a new offering around them.
Customer loyalty programs aren’t a commitment to make lightly, but they can be rewarding. With a plan in place to delight and compensate your consumer base, you can reap the benefits of loyal customers long-term.