It can cost up to five times more to attract a new customer than it does to keep an existing one. Existing customers are also likely to spend more than new customers. Despite this, a lot of small businesses spend more time, money and effort on gaining new customers than they do on nurturing and deepening the relationships they have with existing customers.
A customer loyalty program is an effective marketing strategy that focuses on rewarding customers that regularly engage with your brand. Most of us are familiar with the loyalty and rewards programs run by large corporates and the airlines, however customer loyalty programs are becoming more popular with smaller brands as businesses look for a way to stand out and create ongoing relationships with their customer base.
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What is a customer loyalty program?
A customer loyalty program – sometimes called a customer rewards program – is a promotional tool used to build customers’ connection with your brand and encourage repeat business.
From points-based loyalty programs where customers are rewarded for spending with you, to paid programs that provide VIP benefits and volume-based offers (such as offering their 10th coffee or car wash for free), there are many different styles of customer rewards programs.
What are the benefits of a customer loyalty program?
A Nielsen report – How loyal are your customers? - measured loyalty sentiment by surveying 29,000 respondents globally, and found that 92% of respondents from the Asia-Pacific region are more likely to shop at a retailer that offers a loyalty program.
Square sellers reported that customers who are enrolled in a Square Loyalty rewards program are twice as likely to be repeat customers and spend 37% more than those who aren’t.*
A well-structured and executed loyalty program will deliver:
- Better customer retention. Customers who are part of a loyalty program are more likely to feel engaged with your business, continue to buy your products and services, and spend more.
- Direct communication with your customers. By joining your loyalty program, a customer is agreeing to begin a relationship with your brand. Collect an email address or mobile number to share targeted promotions and encourage these clients to follow you on social media.
- More customer referrals. If customers love your loyalty program, they’ll tell others about it. You could even consider rewarding clients for referring friends and family to your business with a discount off their next purchase for every referral who becomes a client.
- Valuable customer data. Customer data is worth its weight in gold. Savvy business owners are experts at using loyalty program data to really get to know their audience and creating messaging and promotions that are specifically targeted to meet their clients’ needs.
What should I offer as part of my customer loyalty program?
Your business’s loyalty program should be customised to reflect your brand. The way you approach your customer rewards program will depend on the size of your business, the products or services you sell, how often your customers shop with you, and many other factors.
Some popular loyalty program approaches include:
- A discount when customers sign up. Reward customers with a percentage or dollar amount off their next purchase when they subscribe.
- Points for spending. Structure a loyalty points program that gives clients points each time they spend with you.
- A special birthday offer. Everyone likes to feel special on their birthday, and birthday promotions have been shown to deliver strong results.
- Rewards for referrals. Reward existing clients when they introduce new customers to your business. Often, this type of promotion rewards both the referrer and the referee when the new customer makes their first purchase.
What features should I look for in customer rewards program software?
- Simple sign-up. The simpler your sign-up process, the more likely customers will join your loyalty program. Ask for just the essential details at sign-up so that it’s quick and easy.
- Integrates with your POS. A customer loyalty program that integrates with your point of sale system allows you to enrol and reward customers seamlessly using your POS. Square Loyalty lets you manage your entire loyalty program from your Square point of sale.
- Supports customised points earning. A loyalty program that can be tailored to reflect your business enables you to provide a more personalised experience for each customer. Square Loyalty lets you reward customers each visit, by the amount they spend, or by item or category.
- Supports customised points spending. You might choose to reward customers by offering a discount on their entire purchase, specific items or categories, or giving them a particular item for free once they reach a certain threshold.
How do I get started with Square Loyalty?
Square Loyalty helps you thank regular customers with a rewards program that’s run straight from your point of sale. There are no long term contracts, and you’ll only pay for what you use. Visit the Square website to learn more or start your free trial.
*Numbers are based on data collected by Square of Square sellers enrolled in Loyalty in the U.S. On average, 30% of U.S. customers enrol in Square Loyalty.