Attracting new customers might be important, but keeping those customers over the long-term is even more vital. Creating focused marketing and an incentive program for current or repeat customers is both more cost effective and more likely to achieve desired outcomes, since those customers have already demonstrated a willingness to do business.
If customers have already felt compelled to shop at a particular retail store or call for a specific service, then they are familiar with the business and–as long their experiences were good—more inclined to return than take a chance on someplace new and unfamiliar.
Most importantly, those customers were drawn to a particular business for a reason, which truly is the hard part – getting their attention in the first place. The next step is inspiring those customers to return again and again.
As Chris Luo, VP of FiveStars, recently told Forbes, “Loyalty programs are proven to increase customer lifetime value by up to 30% or more by increasing visit frequency, increasing spend per visit, and winning back lost customers.”
Another Forbes article pointed out that it is seven times less expensive to retain a current customer than to attract a brand new one, and while there are many methods for retaining customers, effective customer loyalty programs are one of the top methods for building strong customer relationships. Not only do they encourage customers to return for repeat transactions, but they also inspire those same customers to spread the word about the great deals they’re getting and help build up a sense of customer loyalty and satisfaction that can’t be replicated or simulated.
Customer loyalty programs can do all of the following for most businesses:
With a good customer loyalty program, customers will gain incentives for repeat visits and benefit from greater access to the business’ products and services. A reputable POS system, like talech, will have a customizable customer loyalty program included in the package offering.
When customers feel like they’re getting a great deal, they tell their friends. They want to share their love of a product or service with others. A good customer loyalty program gives them a reason to be excited and spread the word.
Customers go where the deals are. Great products and services are the foundation, but good marketing and great incentives can set a business apart from its competitors.
When customers enjoy a product or service, they will make an average number of purchases. When they not only like the selection, but feel they get extra discounts, free items, or other incentives to keep buying from a business, they will often choose that business over competitors more frequently in order to qualify for the rewards. This mindset can have a very positive impact on overall sales numbers.
Most importantly, customer loyalty programs, no matter how they’re structured, are designed to reward and treat customers who are loyal. When customers feel like they’re valued and appreciated, whether that’s shown with a free item or by qualifying them for special privileges or access, it’s going to build up customer interactions with a business—build up a relationship—that business owners need to continue to encourage with good service and great products.
Customer loyalty programs can never make up for bad service or poor quality products, but they can help take a business with great service and merchandise to a new level. Business owners who are looking to build a strong customer base and encourage long-term success would benefit from designing a customer loyalty program that would suit their customers.
Basic retail models exist, but there’s no harm in getting creative. The most important aspect to remember, however, is that loyalty goes both ways. When a business treats its customers like they’re valued, they will return the sentiment–which means no gimmicks or tricks.
Effective customer loyalty programs work best when they’re genuine and truly beneficial to the customer. In the end, even if a business ends up giving away a few items a week, the end result in sales from customers who have earned those free items will be more than worth the cost.