Customer loyalty programme | small business advertising

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How Small Businesses Can Boost Sales With a Customer Loyalty

Programme


When you’re setting up a new business, think about whether a customer loyalty scheme would work for your business model, and how you might be able to incentivise and reward repeat business.

It may be that your customers accrue points for every purchase that they make, entitling them to a free product when they reach a certain target.

Perhaps you can offer a discount once a minimum spend threshold has been reached?

Loyalty schemes come in all shapes and sizes, so there is sure to be one to suit your business.


There are many advantages to a customer loyalty scheme. It can allow you to:-

Retain existing customers Initially a loyalty program provides an incentive for customers to make a repeat purchase, but a loyalty program also increases customer engagement and enthusiasm, especially once customers begin to redeem their rewards.

Move customers up a segment Designing your loyalty scheme to reward higher spending, for example by incentivising a minimum spend threshold within a specified time period, can move your existing customers from one spend segment up into another. Your loyalty program may persuade them to try more expensive products or services if they feel that the rewards will be greater.


Win back previous customers It is often easier to win back previous customers than to attract completely new customers, especially when you’re offering rewards. When you set up your loyalty scheme make sure you get in touch with any previous customers, even if you think they will have begun using another business.

Increase Customer Lifetime Value CLV, or customer lifetime value, is now recognised as an important factor for the health of your business. The customer centric view of business means we should be focussing on how much a customer will spend over the course of their relationship with our businesses, rather than looking at how much we can get them to spend right away.


Attract new customers Satisfied customers that feel they are benefiting from your loyalty scheme will become brand advocates and will recommend the scheme to their friends and colleagues.

While the main point of your loyalty scheme should be to retain and upgrade existing customers, attracting new customers can certainly be a side benefit.


Characteristics of an Effective Loyalty Scheme An effective loyalty scheme should be targeted towards the segment of your customers that are likely to make multiple purchases.

It should also be designed to encourage customers to try new products or services that they haven’t used before, rather than simply repeating the same purchase over and over again.

Finally your loyalty scheme should provide enough of an incentive for customers to return to your business, even when it may be cheaper or more convenient for them to go elsewhere.


Shoe Shop Loyalty Scheme Case Study: A successful local shoe shop specialising in branded children’s shoes has a loyalty scheme, complete with loyalty card, which gives customers a 5% discount on their fifth pair of shoes, a 10% discount on their tenth pair of shoes, a 15% discount on their fifteenth pair of shoes, and a 20% discount on their twentieth pair of shoes.

This works for their business as their target audience is mainly parents of young children with continuously growing feet, who will need to be buying shoes on a regular basis, and are often buying multiple pairs at a time in the form of school shoes, weekend shoes, trainers, and wellington boots.


The loyalty scheme encourages parents to return to their shop, when in fact they need to pass at least two other stores which sell the same brands of shoes to do so.

As the shop also sells more expensive adult shoes, the loyalty scheme actively encourages parents to use their discounts to buy shoes for themselves, thus making a bigger saving whilst increasing business for the store.

A well designed loyalty scheme can make the most of your biggest asset; your existing customers, and can help you to build your relationship with them. Your loyalty scheme should reward customers for trying different products or services, and for increasing the frequency of their purchases or their level of spend, resulting in a higher customer lifetime value.


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Customer loyalty programme | small business advertising

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