If you’re a small businesses owner, you want to increase sales, right? (It seems we always start off our posts this way, but it’s only because increasing profit seems to always be on the minds of business owners. We can’t imagine why… )
Well, if you want to boost sales, there are many methods and strategies you can use. But none can help you make the most of your existing customer base quite like a mobile loyalty program can. Your existing customers are your most receptive audience, and a mobile loyalty program gives them a reason to increase the amount of business they do with you, as well as the amount of engagement they have with your mobile app.
There is a long list of other benefits to offering a mobile loyalty program, too. Here’s the short version:
Benefits of mobile loyalty programs:
• Increased customer spending. Economics 101 teaches us that we generally do more of a thing that we’re incentivized to do. Mobile loyalty programs incentivize spending. Therefore, customers spend more.
In short, the message to customers is, “Keep buying, and you’ll get a reward.” So they do. We can’t count how many times this has worked on us as customers. For example, why go to another quick sub shop when two more purchases at Subway will get you a free sandwich? Subway it is!
• New customer acquisition. About 40% of consumers will change buying habits to maximize loyalty rewards. If you want new customers, the promise of rewards is just as powerful an enticement to strangers as it is to existing customers. Heck, you might even get back some lost customers when they see that a business they’ve used in the past is now sweetening the deal.
• Increased visit frequency. 35% of people will drive out of their way to use a business that they have a loyalty program with. If you want to see customers more often, a mobile loyalty program will probably bring people in more frequently, especially when you can push notifications to users and connect with them while they’re out and about, through their mobile device.
• Increased product awareness. Have a new product that you want to promote? Make it a loyalty reward, and more customers will get familiar with it, boosting future sales (provided the new product is good, of course).
• Increased customer activity tracking. A mobile loyalty program lets you leverage the power of analytics to gain a wealth of info and insights into your customers. And with access to device data, you can even figure out where and when customers decide to make purchases, and how to best design your rewards program.
• Increased customer satisfaction and retention. 62% of customers report that they are more likely to continue doing business with a company that has a loyalty program. ‘Nuff said.
That’s a lot of hype you’ve got there. Are any of these benefits actually realized?
Yes! About half of business owners report that their loyalty program is “somewhat effective.” As with any business practice, what you get out of it depends largely on your own input. We suspect that, over time and with the right tools, a dedicated approach can yield extremely cost-effective results.
On that point, some business owners worry that the cost of rewards handed out to increase sales won’t leave much of a net benefit at the end of the day. The cost is actually much lower than most owners think, however, due to the fact that redemption rates are far below 100%. In fact, roughly one-third of loyalty rewards earned are never redeemed!
Loyalty programs are popular and expected. It’s time to get on it.
We’re quickly reaching the point where customers expect loyalty rewards even from small, local businesses. Total loyalty program memberships are now over two billion in the aggregate, with total redemptions nearing $50 billion. Offering a loyalty program is pretty much par for the course, now, and is an easy way to gain an edge on your competition.
And passing on one is an easy way to leave a space open for your competitors to gain an edge on you.
