Can Loyalty Schemes and Apps Help You Grow Your Business?

Posted 15/06/17

In a competitive marketplace where customers have a wide choice of providers for their goods and services, keeping your customers happy so they keep on coming back can be the key to longevity.

Many businesses including restaurants, salons, takeaways, and shops are dependent on the repeat business from loyal customers to keep the tills ring throughout the year. Delivering a high quality, personal service may not be enough to earn this loyalty and therefore businesses may need to think of new ways to entice customers to keep on coming back.

Loyalty schemes are becoming increasingly more popular and widely used by large chains and independent retailers, to both reward regular customers and attract new. A report from YouGov has revealed that three-quarters (76%) of consumers carry between one and five cards with them at all times.* They can have huge benefits for both companies and consumers.

In this article we’ll discuss some of the benefits of loyalty schemes and apps that are available.

A great deal of coffee shops have traditionally offered loyalty schemes, encouraging customers to collect stamps on their branded loyalty card each time they buy a hot drink in order to be rewarded with a free one once the card is full. But with two of the big brands, Costa and Starbucks, recently introducing plastic loyalty card systems, is it time to rethink the strategy and look at how technology can enhance the process?

Digital loyalty schemes can offer companies a rich source of valuable data. As customers register their card or app, a number of data fields can be collected. Email and postal addresses allow discounts and vouchers to be distributed directly to a chosen audience. Customer spending behaviours should provide a business with insight into who are their regular customers and those that don’t visit as often, as well as the level of spend each customer makes.

Regular customers often spend more per visit and are more likely to respond to upgraded services.  Research from Precima** (a global retail strategy and analytics company) shows that a supermarket’s most loyal customer spends on average around 50 to 70 percent of their monthly budget with that merchant.

A loyalty scheme can help ensure you are rewarding the right customers and may discourage the ones that are less profitable to your business. Understanding your customer behaviour trends should also help you improve management of your stock levels, and product selection.

If the loyalty data collected was used to better satisfy these loyal customers rather than focusing on acquiring new customers, significant growth opportunities could be highlighted. For example, Starbucks have reported that “My Starbucks Rewards” significantly contributes to the company’s record growth. They claimed that the scheme played a key role in its 26 percent rise in profit and 11 percent jump in total revenue in 2013’s second quarter fiscal results.***  Therefore, it’s important to use your customer collected loyalty information to tailor your promotions to the audience.

Digital loyalty schemes allow customers to collect points each time they buy which may translate into discounts off their next purchase, related cross-sell promotions and offers, or access to other services from you.  For example the Boots Advantage Card gives extra points for baby and child related purchases. Customers are also encouraged to sign up to the parenting club, which offers additional discount vouchers, loyalty points, and sends regular practical advice emails.     

Some loyalty schemes and apps allow you to encourage and reward social “check-ins” and customer reviews. This is important as loyal customers can become advocates for your company and brand by recommending you to others. Word of mouth recommendations are often more powerful than any marketing campaign.  Small Business Trends reported that the most common way customers find out about a business is via word of mouth. This figure was reported at 85 percent according to the small businesses who took part in the survey. No other type of marketing or advertising came close, with search engines in second place at 59 percent. ****

You can use a loyalty scheme to reengage previous customers who may not have bought from you in a while. This is useful as these customers will have experienced your products and services in the past and therefore aren’t “cold” prospects.

Paul Cooper, director of the Institute of Customer Service, stated that "Current customers are your gold dust, but if you've let customers go, it's cheaper and easier to look at that old base before you start with brand new people - especially if you once had a good relationship with them."***** This means it is often easier to encourage them to try you again with a “win-back” offer or promotion, rather than searching out brand new customers.

As we have seen loyalty schemes may be worthwhile across a number of businesses – from large retailers, high street shops, hairdressers, and takeaways through to restaurants, hotels, and B&Bs – however before you decide on implementing a loyalty scheme it is worthwhile considering what is your strategy? You may want to encourage repeat business, entice customers to spend more, “win-back” previous customers, or in fact all of these. Therefore, having a clear and workable scheme that is easy for you, your staff, and customers to understand may provide the key to the success of your business.

Is it time to consider introducing a loyalty scheme to your business and which one may be best for you? Here is our guide to some of the loyalty app providers that are currently available.







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