A recent study found that businesses that track their customer loyalty are 60 per cent more profitable than other companies So if you want a sure fire way to increase your sales, look no further than repeat business. ActSmart take a look at how small retailers can implement and manage a successful loyalty scheme.
The emergence of digital solutions in recent times has helped larger organisations to manage their schemes more efficiently. Smaller businesses seem more reluctant to ditch paper stamp-cards and other more traditional loyalty tracking systems in fear that digital solutions may be too difficult, expensive or just not worth the effort.
WHAT IS A LOYALTY SCHEME?
The philosophy behind a customer loyalty scheme is simple - repeat customers are rewarded and businesses increase sales. It's a basic but powerful strategy that helps a retailer to engage with their customer, adding value to their purchase and giving them a reason to return. There are different ways to manage and reward loyalty to suit the type of business and the products sold:
Customers earn points, which translate into some type of reward. Whether it's a freebie or another reward of the retailer's choice, customers work towards a certain amount of points to redeem it. Any retailer who opts for this type of loyalty scheme should make sure the rewards are worthwhile and specific to their shop, so customers can't get hold of the same reward by going to a competitor.
Customers who sign up to a retailer's loyalty scheme can benefit from discounts on products they buy in store. The discounts awarded can even be tiered based on the level of loyalty the customer has shown. For example, once a customer has made 10 purchases, they automatically move up to the higher tier giving them bigger discounts. This incentive gives the customer a target to aim for and more of a reason to return to the shop.
Once a loyalty scheme is in place, the retailer can have access to customer data, giving them the opportunity to target individual customers. This could mean an email offering rewards on their birthday, or inviting a select group of loyal customers to an exclusive workshop or product launch.
WHAT ARE THE BENEFITS?
So often retailers are worried about getting new customers that they forget about their existing customers, wrongfully assuming that they will automatically be a loyal customer.
However, according to research from the UK Gift Card and Voucher Association, it's the loyal customers who can impact most on your profits:
88 per cent of businesses with a loyalty scheme are more profitable than their competitors without one
64 per cent of customers visit a business with a loyalty programme more frequently
A 2 per cent increase in customer retention has the same effect as decreasing costs by 10 per cent
It's 6 to 8 times more expensive to acquire a new customer than it is to retain an existing one
On average, current customers of yours spend 67 per cent more than a new one
65 per cent of customers say they would recommend a business because of a rewards scheme
If someone has shown an interest in a shop, even gone as far as making a purchase or attending a workshop session then it's likely that they'll actually want to know more about what that business is up to. But retailers can't rely on them coming back into the shop freely. By making a customer feel like a part of a community with access to a loyalty scheme, they'll be much easier to entice back.
IMPLEMENTING A LOYALTY SCHEME
Loyalty schemes are available in a variety of different formats, from the basic method of collecting stamps on a card each visit to the more technical digital loyalty cards.
Flashing a card at the counter, or even collecting a stamp is a perfect way for retailers to know who their loyal customers are when they are standing in the shop, but how can a business monitor this loyalty at all times? Digital cards provide an answer.
Digital schemes are perfect for quickly and easily gathering essential information about customer preferences and behaviour, offering valuable insights that guide marketing strategy. Analysing the data that the loyalty cards collect means retailers can deliver the right product at the right price at the right time to the right person simply by utilising the data collected each time a digital card is swiped!
Retailers who grasp the opportunity to understand its customers and treat them as individuals are more likely to see an increase in purchases.
Card payment terminals usually offer a variety of add-on features, so if retailers take card payments in store, chances are, they already have the technology available to start a loyalty scheme.
Many digital loyalty schemes also come with the technology to incorporate various other innovative campaigns into the same cards. With the option to create gift cards, savings cards and refund cards there is much more to a digital scheme than just customer loyalty.
TAILORED TO SMALL RETAILERS
It may seem complicated, but a product like The Experts Cards (www.theexpertscards.co.uk) has been specially designed with the independent retailer in mind. The scheme has no set up costs and with minimum order quantities of just 100 cards.
To find out more about how ActSmart can help independent retailers to engage with customers via a loyalty scheme contact us today.
ActSmart is a business support organisation for specialist retailers, their supply partners and trade associations. With over 3000 subscribers, ActSmart is one of the fastest growing specialist business support organisations in the UK. ActSmart currently delivers business support services worth around £300 million per annum across multiple specialist retail channels. Services include 24 hour access to legal advice and tax investigation protection as standard as well as other benefits to help increase your sales, reduce your overheads and to enhance customer engagement. Whether you are a small start-up seeking the help and advice needed to get ahead, or an established independent SME looking for a little support, ActSmart's is a valuable resource giving you 24/7 access to wealth of relevant, and trusted information.
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