Loyalty programs are nothing new to the Starbucks, Wal-Marts and Best Buys of this world, but lately small firms are discovering the wide range of benefits that result from providing their customers with a rewards system. While many small companies remain more focused on growing their customer base than improving services to their existing clients, there are 5 important reasons why small businesses need a well-structured loyalty program now more than ever.
It’s Easier to Retain Existing Customers Than it is to Find New Ones
Keeping existing customers is exponentially easier, less expensive and more advantageous than finding new ones. According to a study by Bain and Co., increasing retention rates by 5 per cent can increase profits anywhere from 25 to 95 per cent. Furthermore, Lee Resource Inc. found that attracting a new customer costs 5 times more than keeping existing ones.
Repeat Customers Spend More Money
A recent survey of 1,000 small businesses by Manta and BIA/Kelsey reveals that 61 per cent receive half of their annual revenues from repeat customers, and that those loyal customers spend 67 per cent more than new ones. As a result, small business owners should be shifting their focus away from customer acquisition and towards customer retention.
Competition is Fierce for SMBs
Retaining customers is a tough feat for any small or medium sized business owner in today’s environment, especially for those competing with brands that have more locations, resources and money to spend on marketing. In order for small firms to compete at their level it is vital they at least remain on par, if not exceed the “perks” offered by their competition. One of the simplest ways for small businesses to do so is through a rewards program.
Canadians Love Reward Programs
According to the 2012 Maritz Insights Loyalty Report, the average Canadian has 6.4 loyalty rewards cards in their wallet, and 63 per cent say they are more likely to engage with a brand that has a loyalty program. Furthermore, a vast majority of Canadians, 78 per cent according to the study, will shop strategically to earn points.
Loyalty Programs Don’t Need to Be Expensive
Loyalty rewards programs, especially those designed with the small business owner in mind, tend to be much more affordable and effective than other marketing strategies. Though punch cards are common for small companies, many consumers prefer a mobile-based solution to wasting more of their precious wallet space. Fortunately there are a wide variety of cheap, digital solutions that can increase customer retention while providing valuable customer insights for a low monthly cost. In fact, many small business-focused loyalty programs, such as Vicinity by Rogers, offer a free 30-day trial.