A Loyalty Program Can Boost Customer Retention and Your Bottom Line
Loyalty programs are an effective way to increase revenue and encourage customers to keep coming back for your products and services. Retail chains, grocery stores, hotels, airlines and various other companies offer them because they want to keep your business — and it works. According to a 2013 Nielsen study, nearly 84% of customers are more likely to stay with a brand that offers a loyalty program.
New Garden Landscape & Nursery, Greensboro, has run a successful loyalty program for 15 years in their retail store. They use a point-of-sale (POS) system with rewards management features to sign up customers and track sales. Members of their program get a key card that’s scanned each time they make a purchase.
“Every 300 points gets a $15 credit that can be applied to retail purchases. Points are earned on regular- priced purchases and excludes labor, delivery and landscape services,” said Jessica Story, Customer Marketing Manager for New Garden.
Rewards Programs Can Pay Off
Creating a rewards program can give you a great return on investment. Recent marketing research shows that it costs five times more to gain a new customer compared to keeping an existing one. At New Garden, 70% of purchases are by customers enrolled in their rewards program.
Increasing customer retention by a mere five percent can increase your profits from 25%-95%. According to Story, New Garden rewards customers are spending more per transaction than non-rewards customers. Purchases from rewards customers make up 77% of overall sales.
Other Customer Benefits
A rewards program can include additional perks that won’t cost anything to your business but will help you build a marketing database. When a customer signs up for your program, indicate that you want permission to send them exclusive offers.
New Garden customers in the rewards program receive a members-only newsletter with coupons, and invitations to special events and seminars.
“Our rewards members also get a one-year warranty full replacement on their trees and shrubs, while non-members only get a six-month warranty,” said Story.
If you attend trade shows, you can ask rewards customers to stop by your booth for a special giveaway to help your company stay top-of-mind among the other exhibitors.
Rewards Are Not Just for Retail
Wholesale and service companies can also use a rewards program to maintain customer loyalty throughout the year. Discounts can be offered to wholesale buyers through a tiered program of purchase levels to encourage them to spend more per visit. Service companies can offer regular clients a discount after a certain number of visits.
A rewards program can also help you track customers so you can anticipate their needs. Landscapers can use the program to maintain customer information and send reminders for services. You can also offer special pricing for bundled services to encourage clients to stay with your company for all of their needs.
You can also boost business during slow times of the year by offering a price break. Wholesalers can offer a discount on purchases made at the end of the busy season to help boost sales and get rid of leftover inventory. Landscapers can offer incentives for projects that clients usually want completed in the spring and summer.
Don’t Forget Referrals
Referrals are a great way to secure new business and offer your customers a bonus for their recommendation. Small businesses can use these referrals to increase their customer base through word-of-mouth recommendations from current clients.
Creating a referral program can be as simple as printing business-sized cards for current customers to pass on to potential new customers. You can offer a discount on a regular service or add a smaller service at no cost for every qualified referral that becomes a new customer.
Loyalty programs can work across business types with a little creativity and an investment that works with your budget.
