At any given moment, countless companies of all shapes and sizes collectively spend millions and millions of dollars on their marketing and advertising in order to gain new customers. Yet, when it comes to retaining the customers they already have, there is surprisingly little investment or even interest.
It’s a big and costly mistake.
Not only does it take less effort and resources to bring your current customers back for more, your loyal customer base can be your biggest brand advocates, and thus one of your biggest marketing assets. For this reason customer loyalty programs are a big deal, especially for small businesses.
Why Marketing to Your Current Customers Works
Many companies make the mistake of focusing on that first sale, and then once the money is literally (or figuratively) in their hands, they move on to the next client. They are basically throwing money down the drain. Many studies have pointed to the fact that it costs far less to retain existing customers than it does to acquire new ones since you don’t need to spend as much time or money attracting, convincing, and educating those returning customers. Repeat customers also tend to spend more per sale. In short, cultivating happy, loyal customers is the key to a steady stream of revenues and to a more profitable business in general.
So, when was the last time you contacted your previous customers? Have you offered them a valuable perk or enhancement to your product or service? Chances are they are going to forget about your business and the experience they had, and the next time they need the same or similar product or service the could just as well shop at a different business.
I had my house painted almost five years ago. While the experience was pleasant and the painting company did a good job, the owner never reached out to me once the job was done. I was very happy with his work, and he could have easily gotten another order from me without spending a cent on advertising. But, when it came time to paint my house again, I got a nice bid from another contractor and chose them instead.
Why Discounting Almost Never Works
Depending solely on discounts will not only adversely affect your bottom line, but there is an even worse aspect to this method: You condition your customers to only buy from you at a discount. Try to charge them a legitimate price later on and they’ll end up feeling cheated.
So if you’ve never gone beyond offering discounts, then explore it. One much more effective way around the discounting model is to enhance the perceived value of your products and services by either doing a better job highlighting your key strengths, your competitive advantage, and being exceptionally focused on your ideal customer.
What Type of Customer Loyalty Programs Should You Use?
Most customer loyalty programs these days fall flat precisely because the methods used are out of touch with today’s consumer habits. There’s none of the engagement that many consumers are so used to now. This engagement can come in many forms, such as tying a traditional loyalty program to social and location-based check-ins, using gamification, or offering some valuable upgrade based on specific actions, such as recommending a friend, leaving an honest online review, or sharing an experience using your product or service on social media.
Once you have decided which actions to reward, then you need to decide how patrons will become a part of the loyalty program. There are two basic ways to do this – either electronically, typically by downloading a mobile app, or with the use of a physical card. Which one you choose will depend on your business and customer base. If you go electronic, then just keep in mind you’ll need the right software and system support it. If you choose a physical card then you need to invest in a good card dispenser. (You can find one at www.lintechtt.com.) Just make sure you are still keeping tabs on its usage among customers.
And that brings me to my final point…
Regardless of what your customer loyalty programs look like, they are only as good as your monitoring of it. The information you can glean from monitoring the success (or failure) of a given program is pure gold. Getting a peak at how your customers are responding, who is responding, and when, can give you vital marketing clues. Your data has value because you can use it to make profitable business decisions in the future. If, for example, you see that certain types of customers tend to frequent or “check-in” to your restaurant at specific times, say around 1 to 3 pm, then you can create specials geared towards bringing these people in specifically at those times. On the other hand, when business is slow you can offer some valuable perk or enhanced experience to bring customers in at a time when they normally wouldn’t patronize your business- kind of like the happy hour that some bars have.
In short, when it comes to small business customer loyalty programs, they will only be as good as the investment that’s put into them. But when it’s done right, it will pay for itself many times over.
*This post was brought to you by Lintech.