Statistics like this one from Harvard Business Review, that it costs anything between five and 25 times more to attract a new customer than to retain an existing one, have often been cited to justify loyalty schemes. Even the smallest firms apparently need to have a loyalty scheme of some kind in place, and that’s that.
However, it’s also true that the game of keeping customers by your side has evolved somewhat as of 2017. You probably only need to look into your wallet, at all of those loyalty cards with big-name retailers that you barely use, to be left wondering whether the whole ‘loyalty program’ thing is a bit tired these days. Is it still even worth bothering with a loyalty scheme for your business?
Customer loyalty is still important – but your approach must evolve
The good news is that even in the current supremely competitive retail environment, it’s by no means impossible to build loyalty in your valued customers. According to a recent PwC report, in fact, some 65% of UK shoppers consider themselves to be loyal shoppers, compared to 61% across the world.
However, there’s also evidence of an ambiguous attitude among many Britons today to points-based loyalty programs. 54% of consumers responding to one recent Deloitte study claimed to like such schemes, but 42% said they needed more than loyalty points alone to justify shopping with a particular brand.
While 26% of those surveyed for the Deloitte research cited a given brand’s customer loyalty scheme among the reasons they would be loyal to that brand, 27% pointed to the importance of the overall shopping experience. So it’s clear that while a good loyalty scheme is still important for keeping hold of customers, you shouldn’t neglect other parts of your firm’s offering in the process.
There are many good ways to encourage loyalty
As overused as loyalty card schemes have been in recent years, they still have a part to play. However, when you are running your own small business, it’s probably best to leave the more complicated points-based systems to the larger retailers, and instead keep things simple – for example, offering a free spa treatment after the customer’s first 10 or 20 visits.
An easy-to-understand, well-designed and attractive loyalty scheme can help you to keep more of your customers without ending up in a situation where you’re just giving away products or services for free and losing money unnecessarily.
But as mentioned above, it’s far from the only thing that will make your customers inclined to stay with you. Is your all-round customer service friendly, responsive and professional? Do you hold events from time to time reserved for your most loyal customers? What about working with renowned small business marketing specialists like Groupon to keep your brand prominent in the minds of those who may have used your business before, offering limited-time-only discounts to tempt them back onto your premises?
There’s a lot that you can do to encourage loyalty. So while the traditional loyalty program remains very much ‘worth it’ for even the smallest businesses today, we would also urge you to explore every avenue for keeping more of the right people coming to your retail store, salon, spa or other small business, whether they are old customers or new.