Running a loyalty rewards program is the best way to retain existing customers. It can also help you attract new customers by setting your brand apart from the competitors. With increasing competition in the market, more businesses are recognizing the need for customer loyalty. Encouraging customers to stay loyal has become a challenge for businesses, especially for the small ones, as customers have lots of options to choose from in the market.
This is where loyalty programs come into play. Almost every business, from average to large-sized, is running a loyalty program today. But for small businesses, it is not very practical to spend a lot on loyalty programs. However, with a proper strategy, small businesses can create effective loyalty rewards programs under their budget. Before you start looking for a loyalty program provider, you must understand why loyalty programs are so important for a business:
Why is a Loyalty Rewards Program Important?
Studies suggest that acquiring new customers can be 5 to 25% more expensive than retaining the existing ones. Though it is essential to attract your target audience, focusing more on customer loyalty can take your brand to another level. Customer loyalty matters even more for small businesses, which can not spend much on customer acquisition.
In today’s competitive market, it becomes challenging to motivate your customers to stay loyal when they have a lot of other options. But with an effective loyalty program, you can keep your customers coming back again and again. With these programs, you can reward your customers for every purchase they make. It makes them feel that they are receiving something in return for their spend. As a result, they are encouraged to make repeat purchases to earn more rewards.
Some of the most significant advantages of loyalty reward programs include:
- Helps in customer retention.
- Encourages customers to make repeat purchases, which further increases the Customer Lifetime Value (CLTV).
- Strengthens your relationship with your customers by improving customer satisfaction.
- Helps you differentiate your brand from the competitors.
Tips for Running loyalty programs for small businesses
If you are running a small business and trying to build an inexpensive yet effective loyalty program, the following tips might help you achieve your goal:
1. Profile your customers
Profiling your customers refers to creating a perfect picture of your target audience. It is important to identify what your target audience or your customer base looks like. You will have to study your customers and categorize them based on their interests, buying habits, locations, etc. Also, check your customers’ data to find out how many customers make repeat purchases and what is the percentage of one-time buyers.
You should also consider the reviews and feedback of your customers to understand what they like the most and what they do not. After recognizing the requirements and interests of your customers, you can build the most successful loyalty program that does its job of customer retention perfectly.
2. Find What Your Customers Value
You can not make the most out of a loyalty program until you offer something that your customers value. The rewards or benefits you are offering must be interesting enough for your customers to build excitement among them. They will definitely come back to earn more rewards, provided that the rewards are valuable for them.
To find out what your customers are interested in, you can take customer surveys or launch polls through your social media accounts. Another way is to launch short-term offers with different reward options and see which offer gets the most customer engagement. Going with a rewards-based or a cashback-based loyalty program is always a safe option. You can either offer a certain percentage of cashback or a certain number of rewards every time your customers spend a specific amount on your brand.
If you are creating a rewards-based loyalty program, try to offer some great redemption options to your customers. Allowing them to use the rewards against future purchases is the most effective way to encourage repeat purchases.
3. Build 2-3 Programs
Many businesses have different types of loyalty programs running simultaneously. You can also do the same to set your brand apart from the competitors and make the loyalty program exciting for your customers. Let us help you understand this with an example. Suppose you run a rewards-based loyalty program. You have a separate portal for loyalty programs where your customers can log in to track their rewards and redeem them.
To make this program more interesting, you can include gamification. Along with the regular rewards that your customers earn on making purchases, allow them to increase the number of earned reward points in some other ways. You can do this by running a ‘Spin to Win; contest on your website or app. Give your customers a chance to spin the wheel once every day and earn some additional rewards. This will help you increase log-ins to your website/app and also make the loyalty program interesting for your customers.
Similarly, you can even run tier-based loyalty programs along with a basic rewards program or a cashback program. The more rewards you offer, the more your customers are encouraged to stay loyal.
4. Find The Right Platform & Automate The Program
You can find various platforms online that run loyalty programs for small businesses. To find the right platform, you have to keep a lot of factors in mind. Your first step should be to set a budget and look for loyalty solution providers that fit your needs. RewardPort can help you run the best loyalty programs with rewards starting from as low as Rs. 10.
Also, make sure that the platform or tool considers your business objectives and creates a loyalty program that aligns with the interests of your customers. The platform should also allow you to automate the loyalty programs as running them manually can be a real challenge. For automation, you can build a separate rewards portal where your customers can create an account, and all their rewards get accrued automatically when they make a purchase.
Best Loyalty Program Ideas for Small Businesses
The benefits of loyalty rewards and not unknown to businesses these days. However, you need to choose the right type of loyalty program for your brand in order to make it work effectively. The following are some best and most cost-effective loyalty program ideas for small businesses:
A punch card is one of the most basic types of loyalty programs. With a punch card, you can encourage your customers to make a certain number of purchases in order to earn a free gift/reward. For example, suppose you run a salon. You can print punch cards with 9 empty boxes and include a free service (like a free hair spa) in the 10th box.
Now, every time your customer visits and avails of your service, a box in their punch card gets stamped. On their 10th purchase, they can avail of a free hair spa along with the service they are going to avail of. This is one of the easiest loyalty programs as you don’t need to make any special efforts to run this.
Come Up with Membership Plans:
Customers love it when they are appreciated for their purchase. Having a membership plan is one of the best ways to make your loyal customers feel special. You can either have a free membership plan or a paid plan or both. Allow your customers to sign-up for the membership plans and avail of the benefits.
If you are having a free and paid membership plan, you can include more benefits with the paid plan. Make sure not to keep the fee of these plans low and affordable for most of your customers. Your goal should not be to make revenue out of this fee, but only to make your customers stick to your brand. Once your customers pay a fee for the membership plan, they are very less likely to switch to other brands.
Points-Based Rewards Program
Points-based loyalty programs are the most popular these days. You can offer a certain number of reward points on every purchase your customers make. In these programs, the number of reward points is fixed against a certain spend amount. The monetary value of rewards and redemption options can be decided by the brand.
For example, you can offer 10 Reward Points for every spend of Rs. 100. Now if a customer makes a purchase worth Rs. 500, they earn 50 points. Let’s say the monetary value of 1 Reward Point is Re. 0.5 and you allow redemption against your own products or services. The next time your customer purchases something, he/she gets Rs. 25 (50 points worth Re. 0.5 each) off on this.
Referral programs do not only work for customer retention but are also very effective in acquiring new customers. You can run a ‘Refer a Friend’ contest on your website or app. Make sure that you offer some valuable rewards or discounts so that your customers refer as many friends as they can. Once their friends sign up or make a purchase, your customers as well as the friends get the reward.
The benefits of loyalty rewards are not only restricted to customer retention, but these programs also help you acquire new customers, boost brand awareness, and improve customer satisfaction.
Run an Effective Loyalty Rewards Program with RewardPort
RewardPort is one of the top rewards and loyalty program providers in India. With high-quality and low-cost rewards, RewardPort can help you run cost-effective loyalty programs that are just perfect for your small business. The team of marketing experts at RewardPort considers every small detail of your business to come up with an effective loyalty program plan that works best for your brand.
Frequently Asked Questions: -
Some most common types of loyalty programs include Reward Points based loyalty programs, punch card-based loyalty programs, cashback-based loyalty programs, tier-based loyalty programs, and membership-based loyalty programs.
Customer loyalty is very important for every brand. Several studies have shown that loyal customers spend around 31% more per transaction than one-time customers. Moreover, customer acquisition is much more expensive than customer retention. Loyal customers do not just make repeat purchases, but they can also help you gain new customers by encouraging word of mouth.
A loyalty program is a strategic rewards-based program that businesses run to encourage their customers to stay loyal. Running a loyalty program has become important these days because it is challenging to retain customers in such a competitive market. The best way to stay ahead of your competitors is to run a unique and effective loyalty program.