Competition is the Driving Force
It is becoming quite unusual to find a small business owner that will tell me "No, I don't need more customers." Competition is fierce in virtually every market segment. Not only are these entrepreneurs competing against similar sized enterprises, but they also struggle to do business in the same market space as the big box stores and national brands. The big boys in business have deep pockets which equates to significantly better buying power and the ability to purchase greater brand recognition.
Small businesses make up nearly half of our nation's gross national product. It is the independent, small business owner that employs the majority of workers. These budding business mavens have a few significant things in common -- the need to discover a means to enhance customer retention, reduce expenses and become more profitable. Loyalty programs are one vehicle that the major brands utilize, that is becoming increasingly viable as a tool for small to medium size enterprises.
Customer Loyalty and Loyalty Rewards programs have become nearly expected in today’s marketplace. Traditional National Brand businesses are using them to keep pace with the evolving ecommerce world, and ecommerce sites are using them to boost retention and drive down acquisition costs. Now, small to medium size enterprises are finding these programs as an essential element in thir efforts to remain competitive in every arena and yes, to remain relevant in today's economy.
Loyalty programs have seemingly been around forever -- longer than I can remember in fact. How many of you remember "Green Shield Stamps" and "Blue Chip Stamps?" Stamp-based loyalty rewards programs began in the 1800s, but even that was probably not the beginning. What about the "Modern Era?" How and when did loyalty programs get their start in more modern times, and why have they become so popular?
I believe that it was American Airlines that instituted the first successful modern loyalty program. 1981 was the year that American Airline’s started their Frequent Flier program. This is usually regarded as the first full scale customer loyalty program. The program revolutionized customer loyalty and now advertises over 50 million fliers! The American Airline’s frequent flyer program is so successful that it is being copied by nearly every major airline.
The basic premise behind loyalty programs is simple: It is much more cost effective to retain customers rather than acquire new ones. When repeat customers are rewarded, customer satisfaction increases, they shop more frequently and therefore revenue increases. It’s a basic but powerful strategy.
One of my personal favorite rewards programs, the My Starbucks Rewards. (I'm actually writing this article inside my neighborhood Starbucks) According to corporate reports, the coffee giant's customer-retention program significantly contributed to the company’s record growth. According to Starbucks, their loyalty program 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. Starbuck’s also has one of the best examples of a loyalty program optimized for mobile users. Their mobile app acts as a rewards program and a mobile payment method all at the same time.
Grocery stores and even big-box stores such as Best Buy also turned to customer loyalty as a vehicle to boost sales and encourage repeat business. Best Buy relies on it's loyalty rewards program to keep pace with online competitors such as Amazon and eBay. Further buying into the strategy, Best Buy recently increased reward points from 4 percent to 5 percent to motivate customers to keep coming back. This strategy was one key element that helped the company’s profitability and stock to rebound in recent years.
Whether the goal is to continually increase sales or to jumpstart sluggish revenue, customer-loyalty programs appear to have become a staple for many large corporations. But what about your small businesses? How can your small to medium size enterprises use loyalty programs to compete against the big boys?
The Secret to Small Business Loyalty Rewards Success
There is overwhelming evidence that Shared Loyalty Programs offer the greatest advantage to small business owners. Most of the major brands have their own "captive" programs. You cannot utilize your Starbucks Rewards at Peete's Coffee for instance. What if, for example your business could make a percentage of profit when your own customers bought a cup of coffee at Starbucks? What would it do to your business bottom line if ten of your customers purchased new cars this year and that turned into over a million dollars of pure profit over the next few years? These are just a couple real-world examples of the power of a "Shared" loyalty rewards program. Shared rewards programs leverage customers and their spending everywhere in the network -- local, regional, national and even worldwide.
*Businesses who become involved with a shared customer loyalty program report it’s been been effective, meaning it makes significantly more money than costs to maintain it. It’s important for business owners to keep in mind that customer loyalty isn’t just for big businesses – a well-designed program can help any size business scale and reach new heights.
Why customer loyalty programs matter to small business
A repeat customer keeps on giving. Having a customer-loyalty program could help you increase repeat customers, which, in turn could boost your business’s revenue. Based on independent studies, a loyalty rewards customer shops 50% more often, and spends 67% percent more on a given purchase than other customers. With that understanding and mindset, shouldn't their loyalty be rewarded? This is especially true when you understand that retaining customers is less costly than acquiring new ones. By providing loyalty programs for current customers, small-business owners are not only saying thank you but are also motivating them in a very tangible way, to continue their loyalty and become your Brand Ambassadors. Loyal customers will easily spread the word about your business to their friends, family professional, personal and social networks. Actions like this are helping small-business owners increase their customer base, reduce expenses, add additional revenue streams and become more profitable.
Rise above the competition
Large, national brands always seem to be a step ahead of their small-business cousins. They have more resources, locations and greater brand recognition. Shared Loyalty Rewards Programs provide a small business the ability to compete with a large brands, by leveraging big brand-like marketing resources without having to break the marketing budget, reducing the cost of customer/client acquisition. A good shared customer-loyalty program is an easy way for small businesses to increase their brand recognition, retain their personal identity and remain competitive in business spaces that are dominated by big business.
For example, many consumers may not love the coffee at a big-brand coffee chain but do love the fact they can earn points through their purchases and save money in the long run. However, it would be very simple and cost effective for a small coffee-shop owner with quality coffee to do the same.
Customer loyalty doesn't need to cost a fortune
A great Shared Customer Loyalty and Loyalty Rewards Program should be full-featured while not breaking the bank. Here are some high end features you should look for in a program. These are features that your big-brand competitors are paying millions of dollars to acquire:
- No customers registration fees
- No annual customer fees
- No minimum orders
- No specialty products to stock
- Online presence
- Mobile Apps available in the popular operating systems
- Largest existing customer base
- Largest existing merchant base
- Ability to develop a team of local power partners
- Customers/Clients rewarded when they shop
- Customers rewarded when they refer new customers who shop
- Reduces cost of new client acquisition
- Reduces business operating costs
- Provides an additional revenue stream
- Only pay for customer acquisition and retention when they complete a purchase
- Facilitates staff training and program implementation
- Provide tools to:
- Track customer spending habits
- Provide tools to target market
- Reduce under-utilization
- Target specific business/product objectives
Most corporations spend millions of dollars on marketing and loyalty programs. Small businesses are able to achieve similar results with a mere fraction of the expense, while reaping significantly greater rewards.
Customer-retention programs are not just for big brand name players. They can provide many benefits for small businesses, such as increasing sales, helping them stand out and developing a stronger relationship with their customers -- and technology is making it easier and cheaper than ever before to launch one.
Lion's Share Network is an Independent Marketing representative for the **World's Largest Shared Customer Loyalty Program with over 50,000,000 customers. We also represent the **World's Largest Merchant Network with nearly 60,000 merchants and about 1,000,000 places to shop. Over $1,000,000,000 dollars a year pass through our network each year, generating profit for our merchant partners and putting CashBack into your loyal customer's pocket. We put all the loyalty pieces into place providing you with the best possible solution.
Contact the Lion's Share Network for more information on how our Shared Customer Loyalty and Loyalty Rewards program can benefit your business.
President, Lion's Share Network, L.L.C.