SMEs need to invest in loyalty schemes to grow their business and maintain customer loyalty beyond the Christmas rush
Amid the cost-of-living crisis and potential recession, Christmas this year will be a difficult time for both consumers and businesses to navigate. Despite this, it’ll still be a primetime for businesses to build a customer base, and awareness about the brand with consumers. But how can SMEs continue this momentum beyond this peak shopping period while building loyalty with customers into the new year?
Loyalty schemes are critical for SMEs to reward customers, while turning new customers into repeat ones. This is especially important as data reveals that Brits are loyal to up to five brands and that 77% of those in the UK subscribe to at least one customer loyalty scheme. And with larger companies offering such programmes, consumers will expect the same of SMEs.
Repeat customers means repeat business – it’s actually 5 times more expensive to acquire new customers. Loyalty schemes deliver unique insights into the ways in which consumers shop, allowing business owners to personalise their offerings and deals to consumers. This is key to driving repeat business after the flurry of Christmas and post-Christmas deals, and building customer loyalty in the long-run.
Designing the right loyalty programme for your business
When setting up your loyalty programme, it’s important to consider which format works best for your business. There’s three different types of loyalty programmes – visit, spend or item and category. SMEs can choose to reward customers on the number of times they visit, make a purchase or based on the specific products they buy.
Enrol customers at check-out, either in-store or online, getting them to quickly sign up and get added to your loyalty system. With a myriad of tools readily available to SME leaders, set up is generally easy. Platforms and tools including loyalty software, digital or physical punch cards enable you to plug and play a solution that best suits the needs of your business.
Setting up the scheme for success
The three elements that make up a successful loyalty programme include timing, rewards and consistency. Firstly, it’s critical to engage consumers beyond their initial purchase. This keeps them connected soon after with updates on their points or rewards earned, so your business is kept top-of-mind.
Purchases should lead customers to a star or a reward. To ensure the programme is engaging, it’s recommended that 80% of transactions should be eligible to earn rewards. If it’s difficult for consumers to understand how they can earn rewards, they’ll likely disengage. Consider the format and what’s easy to access and understand. Timing is key – it’s best to reward consumers soon after a purchase.
When thinking about the reward for consumers, consider what would be most compelling or exciting for them. Square research reveals that consumers with greatest customer satisfaction have a reward worth at least 50% of the average ticket value or 10% of what they have spent to earn the reward.
Lastly, loyalty programmes enable personalised interactions with consumers. SMEs can utilise purchase history to inform and ultimately develop rewards that will be most exciting and enticing for consumers. Identify previous purchases and send targeted rewards or offers to consumers based on transaction habits.
Leveraging loyalty throughout the holiday shopping season, and beyond
While the busy holiday shopping period in the last quarter of the year will drive sales, it’s also a critical time for SMEs to establish the foundations to drive loyalty into the New Year. Loyalty programmes enable SMEs to reward loyal customers and also turn new ones into regulars.
There’s multiple benefits for SMEs delivering real impact for their business, delivering an uplift in both spend and visit frequency. Continue the momentum from the busy holiday shopping period through a loyalty programme that will excite customers, while setting your business up for success in 2023.