Smart retailers and restaurant owners understand that a good return on investment (ROI) doesn’t always come from opening another location, adding new equipment, or hiring more staff. They know introducing or optimizing a loyalty program also can have significant returns. Here are some examples:
Allowing operators to emphasize value, rather than pricing, as a competitive differentiator. Today’s consumers know that comparing prices between you and your competitors is easy. All it takes is a few clicks. If all consumers can think about when it comes to your brand is how pricing compares, you will likely lose their business.
With a loyalty program, however, retailers and restaurateurs can stop playing the price competition game and separate their establishment from the pack by making an emotional connection with customers. A loyalty program built on brand strengths can be a powerful incentive when the consumer is looking for a place to shop or dine.
Making it easier to maintain existing customers. Consumers like to be rewarded for repeatedly patronizing a store or restaurant. Given the choice of returning to a business with loyalty program or one that does not, most people will choose rewards.
Be assured, it is worth the effort to keep loyal customers. According to BIA/Kelsey, consumers who have previously shopped or dined at an establishment spend 67 percent more there than do new customers. Additionally, statistics cited by the Chartered Marketing Institute indicate that customer retention costs four to 30 times less than customer acquisition, and that increasing customer retention by 5 percent can boost operators’ profits by a whopping 85 percent.
Helping to build personal relationships with customers and increase long-term customer lifetime value. Signing up customers for a loyalty program allows you to collect customer data such as purchase and redemption histories as well as demographic information.
This data can then be used to create targeted, personalized rewards and offers that lead to continuous engagement with your brand. The more relevant these rewards and offers, the greater the individual customer lifetime value (CLV) will be.
Providing data that helps to improve business. Customer data collected via a loyalty program can be leveraged to more precisely identify emerging, evolving, and customer buying or ordering patterns. With this information you can effect changes that boost the bottom line. For example, it can help you introduce new merchandise or alter targeted offers to make them more appealing to a wider range of customers.
From this list, you can see a loyalty program can result in quick return on investment. Part of that investment, however, must be the right technology to manage the program and to provide seamless and accurate rewards and redemption. Invest in a fully functional loyalty rewards program solution that integrates with your Point of Sale (POS) system so your staff can access loyalty program information during transactions. This will allow your staff to let the customer know point totals, redeem points when applicable, and elevate the customer’s loyalty program experience with a personal touch.
Building an effective loyalty program strategy can help you build and retain your customer base and help maintain and grow your healthy bottom line.