Although loyalty schemes have been around for some time, they have largely been associated with big brands. The average American will have more than 3 loyalty cards from big brands like Macy’s, Amazon, Target and so on. Small and medium businesses have largely shied off loyalty schemes for the mistaken belief that they are expensive and complicated to set up. But mobile and social media advances have made it possible to implement loyalty schemes simply and cost-effectively. Small and medium businesses have a lot to benefit from carrying out loyalty schemes.
Studies show that attracting a new customer costs 5 times as much as retaining an existing customer. More data shows that a slight increase of customer retention by 5% can bring as much as 25% in added revenue. There is higher brand recognition and loyalty in older customers which data has shown makes them spend about 60% higher than new customers.
A loyalty scheme allows a business to engage at a higher level with the customers. What offers and discounts have higher response, and who is responding to them? This data collected when running the loyalty scheme enables even better targeting and more successful marketing campaigns.
The simple fact is that there is high competition in pretty much any industry. Small and medium businesses hoping to compete and survive have to be more innovative to level the playing field against bigger brands. A loyalty scheme is an effective tactic for a small customer to protect its turf.
Small businesses also have an added advantage in expending their presence from referrals. This is more cost-effective than spending heavily in branding campaigns.
Mobile apps for loyalty schemes
Mobile apps are powerful tools that can be deployed by small and medium businesses to implement cost-effective and high impact loyalty schemes. Mobile apps allow for higher engagement as content delivered to mobile has higher chances of being viewed than any other platform.
A mobile app enables more relevant loyalty schemes with better responses from the customers. With the correct data in customer spending and browsing behaviour, a business can deliver more tailored discounts, offers, coupons and other incentives to profiles that will respond better.