The Value of Loyalty - How, understanding loyalty might make or break your business 📈 📉
While our team might think of ourselves as the loyalty experts we know that not everyone understands just how valuable loyalty tools can be to help small businesses. Customers who are loyal to a particular brand or company are more likely to make repeat purchases. In this post we are going to (very briefly) discuss how loyalty can keep customers coming back, how more loyal customers increases your revenue, building strong customer relationships, and the creation of a memorable brand 🦑
This post is the first of many to come, aiming to educate the small business community with all the amazing benefits loyalty has to offer - The SQUID team has distilled all these loyalty insights from the experiences of the 1000's of SQUID partner businesses who have joined our platform since we launched.
Keep Customers Coming Back ♻️
Acquiring new customers is important for any business, but retaining existing customers is equally vital. One of the key advantages of a loyalty scheme for a business is that it can increase customer retention. By offering incentives for repeat purchases, businesses can encourage customers to come back and buy from them over and over again. This can be especially valuable for businesses that sell products or services that are purchased on a regular basis, such as coffee shops, salons, barbers, groceries and takeout food offerings. The more a customer visits a business, the more likely they are to become loyal to that business. To put it simply, loyalty schemes get consumers to “shop more, earn more”.
The traditional paper loyalty cards achieved this but with very little insight for the businesses to learn from and no way for them to contact those who took a loyalty card. Digital loyalty solutions including SQUID not only provide a simple user friendly experience but also give businesses key analytics and insights into their retention figures and tools to target customers to come back and visit again.
More loyal customers = Increased revenue 💰
It’s really that simple!
Studies show that it costs five times more to acquire a new customer than to retain an existing one. Therefore, clever businesses that understand the value of customer loyalty will prioritise investing in their loyalty scheme. Studies have shown that businesses gain 70% of their revenue from just 25% of their customer base. This 25% is typically made up of the loyal and recurring customer base. If all businesses invested in increasing this 25% they would see instant growth in revenue. Ever wondered why big companies like Tesco and Boots always ask you for your loyalty card? This is the answer, they want to increase that 25% bit by bit to get more money from their existing customers. Why not take a leaf from their book and get your team to mention your loyalty scheme every time a customer purchases with you.
Get to Really Know Your Customers 👥
A loyalty scheme can also help to build customer relationships. By offering personalised rewards and incentives, businesses can show their customers that they are valued and appreciated. This can lead to a stronger connection between the customer and the business, which can lead to increased loyalty and advocacy. Customers who feel connected to a business are more likely to recommend it to others and to continue buying from it.
Build A brand Your Customers Will Remember 🎨
Finally, a loyalty scheme can help to increase brand loyalty. The SQUID platform encourages our partner businesses to make their profile as informative as possible so customers can connect and discover more about them while also offering rewards and incentives for repeat purchases, businesses can encourage customers to become more loyal to their brand. This can lead to a stronger emotional connection between the customer and the business, which can result in increased sales and customer advocacy.
Key takeaways;
Thought, care and tactics should be put in place around your loyalty scheme to ensure the best results because increasing your loyal customer base = more revenue
Your loyalty scheme should encourage customers to shop more so they earn more, building a repeat cycle and retention of those customers.
Knowing your customers is more important than you think, don’t underestimate the power of insights.
Brand is another tool to attract loyal customers back in to your business, it can help build an emotional connection and incentivise customers back in
To learn more about how to increase sales through your loyalty scheme, keep an eye out for our next post: “How to increase sales and revenue through your loyalty scheme”.