It's easy for new businesses to obsess over building leads and acquiring new customers. Especially in the early stages, you want to drive as much business and buzz surrounding your business as possible, which is understandable.
However the value of retaining your customers and making them loyal cannot be ignored. This is even more true when you consider that it is 25 times more expensive to market to new buyers than old ones.
In this article we will walk through why customer loyalty is so valuable to small businesses, customer retention vs acquisition and crucially how you can implement loyalty without maxing out your budget.
Why is loyalty so important for small businesses
Less pressure from competition
The most common narrative we hear is the small business overlooked for the larger corporation. It happens every day and with the growth of online shopping customers are more price sensitive than ever before.
Independents simply cannot compete in terms of price or in some cases shipping times however if you can build a loyal customer base they will stick by you in spite of this. Rewarding your customers, offering them differentiated products and quality service will make your business immune to the growing competition.
Truly loyal customers will avoid your competitors, not being influenced by their price cuts allowing you to enjoy a certain degree of security in your offering.
Cost effective advertising
Arguably the most valuable reason for customer loyalty within small businesses is the increased chance of word of mouth or referrals.
With tighter budgets you want to utilise every marketing opportunity and with recent studies revealing that 92% of consumers trust recommendations from people they know, as compared to online ads it would be naive to overlook your loyal brand advocates.
Leads to repeat Business
The most obvious reason to build your loyalty is to encourage repeat business.
Customers who like you, your brand and the feeling they get when in store they are sure to return time and time again. Also with the right incentives you will ensure these same customers always choose you first and in the best case scenario advocate for you online, referring you to friends and family.
Retention vs Acquisition
Retention: Keeping current customers and increasing lifetime value
Acquisition: Gaining new loyal customers
We all know that it is cheaper to retain customers than to acquire new ones, having their data in your business and understanding their needs means they are easier to convince.
However to build a successful business that is scalable, you will need to build a loyalty strategy that considers both retention and acquisition. You want to create schemes that will not only reward historical customers but have wide enough appeal to encourage new customers to choose you and stay with your business.
Although it is cheaper to retain a customer it is important to look at the broader picture. In order to have a successful business you will need to grow and therefore create a continuous flow of new customers who are satisfied and stay with you.
The right loyalty scheme will nurture current customers and persuade potential buyers.
5 cheap ways to encourage customer loyalty
So we all know loyalty is important, the question really is how we build this without breaking the bank.
Small retailers don't have the luxury of huge giveaways or online brand campaigns however there are ways they can be just as effective for a fraction of the price. We have compiled a list of the best ways we have found for retailers to see an increase in loyalty with their business.
Money off discounts
The most obvious way to incentivise your customers encouraging repeat purchases is to offer money off discounts.
As well as encouraging your current customers to return, money off coupons could be what brings new buyers to you or gives you the edge over one of your competitors. In a recent survey by Retailmenot, it was found that as many as two-thirds of consumers have made a purchase they weren't originally planning to make solely based on finding a coupon or discount.
Interestingly, four out of five also said they feel encouraged to make a first-time purchase with a brand that is new to them if they found an offer or discount. Once you have hooked in these new customers you can use methods other than money to win their loyalty and think of you first when making a purchase.
Obviously you offering constant money off discounts will only devalue your brand and is not a scalable strategy however it is a useful way to entice new customers in or to get buyers to sample new products.
Exclusive access to new products or events
Ensure your customers come back for more by showing them how important they are.
Build a VIP club for your returning customers, giving them exclusive perks such as early access to new products, free samples or invites to events. Building this kind of system will make your customer more connected with your brand; that they are more than just another customer.
It was reported by Bond that that 37% of customers are willing to pay more money to upgrade to an enhanced tier of a customer loyalty program. This statistic clearly highlights the value consumers place on exclusive access, despite what this actually entails.
Also by offering incentives to these customers you are increasing the chance of purchases on new products as those targeted already have shown an interest in your brand and are highly engaged.
Offers tailored to their buying history
Consumer data is one of the most valuable tools to help you build their loyalty. Simply running offers is not enough; customers want to feel seen and that your business understands them.
Use your point of sale to view customer purchase behaviour and from this, reward them with relevant offers that actually appeal to them.
As well as this by collecting customer data you are able to offer them perks on special occasions to show you value them and their business. This is commonly seen with birthdays but why not celebrate a customer's anniversary with your business encouraging them to remain loyal and stay with you for even longer.
With a cloud based point of sale gathering data and creating these sophisticated schemes couldn't be easier. Unique features such as customer accounts will track all of this data and keep it organised within your back office ready to use when you wish.
Point of sale systems such as AirPOS also offer integrated loyalty programs which utilises all the data already stored in your POS. These schemes are completely customisable and ensure increased customer satisfaction as you can offer them rewards that are actually relevant to them.
Unique in-store experience and branding
Sometimes building loyalty isn’t always about money, it’s how your customers feel when interacting with your product or service. Thus your branding and the experience you build in-store is so important.
You want customers to feel an emotional attachment to your brand, one so strong that will prevent them from buying from your competitors, despite the price.
Take branding into consideration in all communications with your customers. On social media ensure your messaging is consistent and also that your employees also uphold your messaging whenever you are absent.
Think of the clothing brand supreme. The products they sell are simple, yet, through clever marketing, they are able to sell out every release with their products reselling at over 1200% of their retail price.
They have been able to create a feeling of exclusivity surrounding their products and although a major brand, their strategy can be used by any business.
Creating such a brand image simply requires planning, who your business is and where it positions itself in the market. From there you can build an effective strategy and relevant communications.
Utilise your social platforms
Social media is one of the most effective tools a business can use to build an engaged and loyal following. The key, however, is to be organised and understand your following.
Brands that are able to build a loyal engaged audience are those who understand their following and generate content that appeals to them. Trying to appeal to the masses, in most cases will result in shallow glimpses from customers with low intent.
Take time to examine your audience, who are they, why do they shop with you etc. From this, you will be able to draw in people who are more likely to actually be interested in your offering.
American food manufacturer Kelloggs has one of the most successful social marketing strategies simply by understanding the voices of its different brands. Although a huge multi-national it’s methods could easily be adopted by even the smallest of startups.
The most effective of its brands, Pop-Tarts, has built a loyal following on Twitter due to it’s sarcastic and witty content which directly appeals to its target audience, teens and young adults. This is the polar opposite of their parent company Kellog's who also has a loyal following but from much more wholesome and traditional content.
This is a brand who understands its different market segments and without breaking the bank have been able to build followings who give feedback, share posts and will buy into their new products.
When thinking of social media it is important to remember what it is, social.
Yes, these are brilliant sites to run ads and increase awareness but those brands who are most successful are also those who interact with their audience.
In a study conducted by Sprout Social, it was found that 85% of Twitter’s 330 million active users think it’s important for businesses to provide customer service using the network.
It can also be seen on the graph below from the same study the level at which customers value responsive brands whether this is simple replies to comments or whether this is responding to complaints/concerns.
Many businesses still do not see social media as a valuable tool in building loyalty, however a whopping 93% of twitter users planned to make a purchase from an SME they followed on social media.
And why not? People want to buy from brands they connect with and support, and there is no better place for them to learn about your brand than a page with content correlated by you.
Also with the new capabilities on socials, your followers can see an item and within one click be directly on your site with it in their basket at checkout. The possibilities are endless and the cost minimal.
Therefore the time to start thinking about your customer loyalty is now. It doesn't have to cost your business a huge amount, you simply have to listen to your current customers, plan ahead and importantly build schemes that make sense for them.
With AirPOS you can start building your loyalty scheme immediately with zero fuss, all integrated into your Point of Sale. Combining both customer accounts and loyalty packages you can ensure your customers keep coming back for more supercharging your sales.
If you'd be interested in learning more about these Pro features make sure to get in touch with a member of the AirPOS team.