Acquiring new customers is essential for growth, but getting new people in the door is only half the battle. How are you going to get them to come back? If you’re answer is to simply provide a great experience, think again. Up to 80% of customers who describe themselves as satisfied don’t return for another visit.
That’s crazy, but it’s also very telling. These days, simply satisfying a customer isn’t enough, especially as options and distractions continue to grow. Small businesses spend a lot of time, money, and attention attracting new customers, but repeat business is a vital part of any healthy bottom line.
The good news: It’s not too late to improve customer engagement and retention, and there are several ways to reward your customers for their loyalty and encourage repeat business.
The better news: Doing so will benefit your business in truly remarkable ways. A mere 5% increase in customer retention typically increases profits 25 to 95%.
The bottom line: Customers want a relationship with the businesses they support. The more valued customers feel, the more likely they are to shop at that location again.
While any program to boost customer retention is better than nothing, the programs that work the best are the programs that don’t feel like programs. Customers prefer programs that engage and make them feel like they’re a part of the family.
We pulled together a list of 5 ideas that can be used in nearly every industry or type of business. We hope they spark some ideas and help you put together a program for your customers.
How can you tell if your customer loyalty program is efficient? Just follow these six principles.
5 ideas to get your creative juices flowing
1. Buy one, get one
Buy-one-get-one (BOGO) offers have been around for ages because they work, but there’s nothing magic about the number “one.” You can play with the ratios the offer structures.
“Buy three tune-ups, get fourth free!” or “buy two, get one free!” both capture the effectiveness of a traditional BOGO offer.
While BOGO offers are more in the realm of a discount or coupon than the rewards program, they can easily be harnessed to increase customer retention and motivate repeat purchasing. They could be a key component to your loyalty program, and best of all, they’re easy to put in place.
- PROS: Time-tested and still a compelling offer for most shoppers.
- CONS: Hard to repeat over time and can cut into your margins.
- TIPS: Compensate for the downside of BOGO programs by offering items that don’t cost you much, if anything. Decreasing the cost of the offer will make it more repeatable. Or you could increase the level of exclusivity for bigger deals. Extending the offer to fewer customers will keep costs manageable and still reward your truly loyal members.
2. Punch cards
Punch cards are another classic customer loyalty program that rewards the daily, weekly, or monthly shopper. They are one of the easiest programs to start, and people understand them.
These cards themselves are not, however, the most compelling offer. They can be highly effective when your business or service is one that warrants frequent purchasing, but if the purchases are higher priced items or services, they won’t be as compelling.
- PROS: Cheap to start, low cost to the business, applicable to nearly every type of business, and allows for flexible reward options. This makes this an easy program to try. It could be a great place to start.
- CONS: Customers often don’t carry their cards, so they don’t get to participate as much as they’d like. Often requires many purchases before getting the first reward, which disincentivizes customers and doesn’t stimulate loyalty.
- TIPS: Keep it simple and light. It’s better to have smaller rewards in between the big rewards. For example, every third punch gets a small reward; every ninth punch earns your customer a more substantial and desirable prize.
3. Buy now and save later
Not all clubs have to be “clubs.” In other words, some businesses don’t lend themselves to the average loyalty program. If you’re in an industry where frequent purchases aren’t common—like the automotive industry, where 4-5 visits a year is a lot—your program could simply be along the lines of, “buy four oil changes for the price of three today!”
This kind of program is highly effective at converting one-time buyers and bringing in higher amounts of revenue. You could win a year’s worth of patronage on their first or second visit, which will open up opportunities for upsells and cross-sells throughout the year.
- PROS: An immediate win, especially for businesses where it’s more difficult to inspire repeat business.
- CONS: Not the most relationship-forming customer loyalty program. It feels a bit more like a discount or coupon.
- TIPS: Find ways to increase the level of engagement on and between each subsequent visit. You’ve won their business for the next few transactions, so be sure you’re gearing up for a renewal when the initial offer finishes. Find ways to upsell and cross-sell.
4. Host local events
Local events are a huge opportunity to rub shoulders with your customers. As much as customers want a good deal, often they’re more than happy to pay full price to support your company. They just want to feel like they belong and are part of a larger community.
Every fall, right around the first snowfall, the snowboard shop I used to manage would host the local “Rail Jam.” They’d truck in ice shavings from the local skating rinks, head to the park to set up some rails and boxes and use the ice to build a fun obstacle course for snowboarders and skiers. It was open to the public for a price, but loyalty members got in free. Other business owners would chip in and sponsor the one-day event, but the community would talk about it for weeks before and after, and looked forward to it all summer long.
This same shop sold bicycles and had an open invitation for Tuesday night road bike rides. No cost to the customer or the business. No memberships. It was just an opportunity to enjoy the activities they have in common with their customers. That, more than anything, formed lasting relationships and repeated business. Remember, the best programs often don’t feel like programs.
- PROS: Community building. Provides a truly exclusive experience and by working with fellow local business owners, you’ll be able to network with their best and most loyal customers, too. It benefits both your existing customers while attracting new customers in the community.
- CONS: Can be pricey and time-consuming, depending on the type of the event.
- TIPS: Don’t get too far ahead. Listen to your customers. They’ll often express things they wish existed in the community that you could provide. And remember to keep the goal in mind. Oft times these local events can distract you with other initiatives that distract from the purpose of the program.
Education takes your customer relationship to the next level. It provides face-to-face interactions that will last much longer than that 15% discount or another punch in their card. The outcomes will also be much more beneficial and far-reaching for you and the customer.
One of the most commonly expressed desires customers have about local businesses is more tips and advice, especially if you run a shop for hobbyists. Budding enthusiasts and seasoned vets alike love to learn the latest tips and tricks about the products and services they use. Imparting your knowledge and years of insight is something only you can provide, and customers want to hear it. More than that, you’ll satisfy a shopper’s number one want: a hands-on experience before buying.
- PROS: Highly engaging, personal, and compelling. Free workshops, DIY workshops, or how-to events don’t have to cost the business anything more than a few hours of your time once a month.
- CONS: Hosting an educational setting can be a little time consuming to prep. Some industries don’t lend themselves the mass attraction of what you offer.
- TIPS: Take advantage of your seasonality. If there is a time of year when business is typically low in sales, you can take that time to boost customer retention with a workshop that takes a couple of hours. If you’re uncertain about the ability to incorporate such an event, then start with a small group of your best customers first. Invite your friends and family to participate and provide insight on how to make it more compelling and engaging before you take it to your, other loyal customers.
Keep it real — as in real life and face to face
Customers have never felt less attached to the businesses they support. They’ve not been given the opportunity to engage with you beyond online searches and the few times they’ve been in your store. It has never been easier, or more important, for small businesses to form a person-to-person relationship with their customers, especially their most valuable, loyal customers. The more authentic and personal the connection, the better.
Whereas big corporations have to rely on exclusively digital relationships with their customers, small businesses can engage digitally and in person. People who shop locally already have an attraction to supporting small businesses. Make it easier for them to support yours and feel like they’re a part of the process. You won’t regret it.
Building a truly personal and unique retention strategy requires insight into your customer database. You deserve to know who your best customers are, who comes back often, and who spends the most money when they visit. After all, they’re your customers. Womply’s Customer Directory automatically creates or updates a record for each of your customers every time they transact with your business.
Let us help you understand your customers even more than you do now. Request your 10-minute personal preview of Womply today.