Loyalty programs are often considered time-consuming, especially for smaller retailers and restaurants that may not have the time and energy to oversee a quality program. The question is, are they worth it?
The short answer is yes. Not only are reward programs necessary, but they’ve become a consumer expectation that has sparked a $5.5 billion industry that should nearly quintuple by 2028.
The good news is that, despite the pressure to implement one, business owners don’t have to see a loyalty program as a drain on their company. Instead, they can have very tangible benefits for businesses and customers alike.
Here’s why rewarding your customers for repeat business can pay off not just for them but for your own small business.
1. Loyalty Programs Aren’t as Complicated as They Used to Be
Before diving into the customer-facing benefits of loyalty programs, let’s consider a couple of logistical points. The biggest one is that loyalty programs aren’t as complicated to set up as they used to be.
There are a number of third-party fintech software tools that function as total business solutions from companies like Simpay. These make business finances impressively simple, and many have loyalty program features built into their platform. When done well, these easy-to-use programs take most of the legwork out of creating your own loyalty program.
2. Loyalty Programs Are Data-Rich
The other primary back-end consideration has to do with data. In the past, even if a small business owner managed to set up a loyalty program, it was difficult to monitor and ensure it was benefitting their business.
The modern tools available make it easy to track the impact of your loyalty program. In fact, a loyalty program doubles as another way to collect valuable customer data (critically, with their permission) you can use for future marketing.
3. Loyalty Programs Cultivate Customer Loyalty
Customer loyalty should start with your products and services. In fact, 55.3% of customers report their brand loyalty starts with the quality of the products they purchase.
However, 52.3% also report they are willing to join a rewards program. On top of that, 39.4% openly admit they’re willing to pay more for a product they’re loyal to, even if it costs more.
Creating a loyalty program cultivates the sense of loyalty for which it’s named. That can build an important and dependable customer base for your business over time.
4. Loyalty Programs Boost Revenue
There may be costs associated with establishing and maintaining a loyalty program. In most cases, though, they end up turning a profit by boosting marketing and revenue.
As far as marketing is concerned, loyalty programs naturally turn your repeat customers into brand ambassadors. They foster a fiercely loyal community of individuals who help to build brand awareness through word-of-mouth marketing.
The other aspect is direct revenue. Repeat customers lead to more cash flow into your business. Retaining a customer is five to 25 times more cost-effective than finding new ones. Loyalty programs ensure you retain as many customers as possible.
The Need for Small Business Loyalty Programs
If small business owners want to continue to grow their enterprises, establishing an effective loyalty program should be a top priority on their to-do list. It’s a consumer trend that is popular in the present, isn’t going anywhere any time soon, and has simply become too easy and beneficial to ignore.
So, consider your current situation. Do you have a program in place yet? Is it working? Do you need to upgrade your fintech tools to make an effective program possible? Identify what you need to do to cash in on the powerful impact a loyalty program can have on your company.
