Reciprocating customer loyalty has become an essential factor in staying competitive for many small businesses. In an age of mass information, consumers’ heads can be turned all the more easily, demanding that firms acknowledge customer loyalty in increasingly imaginative ways.
Keeping loyal customers satisfied can also be a vital promotional tool. Research suggests that a referral from a loyal customer has a 92 per cent retention rate, compared to just 68 per cent for customers attracted through advertising.
Also important for a business’s bottom line is the suggestion that acquiring new customers costs five times more than retaining current ones.
A loyalty program can take a variety of forms: perhaps a points system, a tier system or a club card. According to one study from The Loyalty Point, 80 per cent of consumers prefer financial reward schemes, while points-based programs are second most popular.
Choice of loyalty program should be made carefully. According to research by Capgemini Consulting, many loyalty initiatives can be ineffective. Businesses should not exclusively reward purchase and expenditure, but look to reward customers interacting with businesses in other ways (social media, taking surveys, providing testimonials).
Partner with another company
A partnership with a similar business offers another effective way to reward loyalty. For example, a design company could form an alliance with a printer, offering loyal customers from both enterprises discounts at the other. Other examples would be a gym and a sports shop, or a music store and a concert venue.
Offering an additional service or product as reward for loyalty can leave a customer with incentive to continue their patronage.
Exclusive previews and samples
A business might offer particularly faithful consumers an exclusive opportunity to sample a new product or service that is being introduced. Not only does this give the customer the sense they are valued and that they are receiving something for “free”, it also offers the opportunity for your business to receive feedback about the product or service in question.
One of the simplest options – offering an additional service or product as reward for loyalty – can leave a customer with incentive to continue their patronage. Perhaps this could be a complimentary carwash for a mechanic, or free consultations or assessments for a gym or other health-related business.
Popular among some businesses is organising a VIP event for highly valued customers. This option is more appropriate for firms that work particularly closely with a small number of clients, and can take the form of a day out of some kind, or an elaborate dinner.
Barnaby Smith is a writer and journalist who has written for a variety of publications across several subject areas in the UK, Australia and Switzerland.