How a small business can attract customers with a loyalty program

2024 Author: Malcolm Clapton | [email protected]. Last modified: 2023-12-17 03:44

Many entrepreneurs regard loyalty programs as difficult and expensive. In fact, this is not the case. Small businesses are quite capable of implementing a full-fledged loyalty program and attracting customers. Read how to do this in our article.

According to the Pareto principle, 20% of customers generate 80% of the profit. And these are regular customers. Increasing their number is one of the important tasks of any business, especially relevant in a crisis. To this end, organizations often use various loyalty programs, offering bonuses, discounts and other benefits.

Meet Olga, she has a small women's clothing store. Olga agrees with all of the above and also wants more regular customers. But she thinks that a loyalty program is very expensive, difficult and only big companies can do.

Olga entrepreneur Loyalty program? What is this anyway? I just want to attract regular customers and am ready to give them some discounts. How can I organize all this?

Let's try to help her.

1. Choice of format

First of all, you need to choose the format of our loyalty program. There are two types of such programs: discount and bonus. Discounts involve the provision of a discount expressed as a percentage. In bonus programs, customers receive virtual points (bonuses) that can be exchanged for a gift or for the same discount. Bonus programs are a little more difficult to implement, but they are more flexible, and it is easier to complete them ahead of schedule if there is no result.

Olga does not want to simply provide discounts, she is interested in the option of the bonus program, when she can set both the number of bonuses and their cost.

Also, all loyalty programs can be divided into cumulative and fixed. In cumulative discounts, the amount of discounts (bonuses) increases along with the amount of purchases. Fixed offer a constant discount. Accumulative ones are definitely preferable, but more difficult, since you have to solve the problem of identifying the client and accounting for the amount of his purchases.

2. Implementation of the loyalty program

The most commonly used issue is discount or bonus cards. Cards are magnetic and barcode. In addition to the cards themselves, you will need equipment to read them: a magnetic card scanner or a barcode scanner. The scanner is connected to a computer on which specialized software is installed, for example 1C. The costs should be added to the payment for the services of a specialist in setting up the system.

Advantages of plastic cards: automation of the process of customer identification and accrual of bonuses, storage of customer information in a convenient form. If the average check is small and / or the flow of customers is large, then this is the best option. But it does not suit Olga, as it entails significant expenses for her budget.

The next way to identify a client is by some unique code. For example, phone number or last name. In this case, the seller manually searches for a buyer in the database and credits him with bonuses (or makes a discount). The database itself can be stored in various formats. In its simplest form, this is Excel. The advantage is the minimum launch costs, and the main disadvantage is the time spent by the seller. Such a system is convenient for a client who does not need to have a card with him. As a result, discounts and bonuses will be used more often.

You can do without personalization. For example, the supermarket chain "Magnit" periodically organizes promotions, during which customers are given stickers. You collect a certain number of stickers - you get a discount or a gift.

To save money on printing, you can print coupons instead of stickers and distribute them to customers. The buyer who has accumulated and presented the required number of coupons receives a discount (gift).

Another version of such a system was practiced by the Yves Rocher company: regular customers were given cards with stamps indicating the number of purchases.

Bonuses are not tied to a specific client: coupons and stickers can be transferred to anyone. But Olga believes that it is not scary for her. The apparent plus of a depersonalized loyalty program is that you don't need to maintain a customer base. It seems to be because it is "Magnit" such a base unnecessarily, but Olga would like to keep in touch with her customers, and she needs their contacts.

3. Improving the effectiveness of the program

The goal of a loyalty program is not to thank you for a purchase, but to encourage you to make a new one. Therefore, program participants need to be periodically reminded about the store, bonuses and discounts. When registering a client in the program, you need to find out his phone number and email address and try to get consent to receive information materials. Modern mailing services will help you keep your customers up to date with the latest receipts, promotions and other news.

Psychological studies show that people are more willing to participate in programs where discounts and bonuses are given at the very first purchase, when the card is issued.

It is also known that active, active consent increases the chances of participation. It is desirable that on the form of the questionnaire the client at least personally wrote “I agree to participate” and sign it. Moreover, according to the law, you must obtain permission to process personal data.

All good things come to an end. You can immediately limit the duration of the loyalty program, for example, a year. By introducing time limits on the effect of discounts and bonuses, you achieve two goals at once. First, it is a reduction in program costs. Secondly, the lack of time can spur people to make additional purchases in order to have time to use the accumulated bonuses. Although some of these restrictions, on the contrary, will repel.

After reading everything that we have written here, Olga decided to distribute coupons, since she does not want to install a computer for the seller for now. Now it remains for her to decide for what amount she will distribute these coupons and for what buyers will exchange them. But this is a purely individual decision.

If you have experience in implementing a loyalty program for small businesses, write about it in the comments. We promise Olga will read them.