Should Small Retailers Invest in a Loyalty Rewards Program?
Acquiring new customer is one of the hardest tasks for any business – more so for small retailers. No wonder 80-90% of their marketing budget and resources are typically earmarked for customer acquisition. But does it then not make sense to have a plan to retain every one of these hard-earned customers?
A retailer without a loyalty program is like a leaky revenue bucket. You would never use a leaky bucket for gathering water especially when water is really hard to come by. Yet, without a retention strategy, that is exactly what you are doing. New customers come in through the top and simply flow out of the bottom.
The size of your business does not matter. Retailers should ideally implement a loyalty program even before they acquire their first customer.
An investment in loyalty rewards program typically delivers exponential ROI because loyal customers generate 10X more revenue for you. In other words, each loyal customer is worth 10 times a new customer. Therefore even a small increase in loyal customers will have a huge impact on your revenue.
The magic really happens once you get a 3-peat customer. I.e. once a customer buys from you three times. Most retailers are focused only on getting the first sale. The following image shows why that is such a shortsighted strategy:
Ok. So it clearly makes sense to add a loyalty program regardless of how big or small your business is. However, most loyalty programs are expensive and hard to implement. As a small retailer, you neither have the money nor the resources to implement and manage such programs. Therefore you should look for a loyalty rewards platform that offers the following:
- Easy to implement: It should not take more than a few hours to be completely up and running
- Affordable: It should allow you to start at a low price (or have a freemium model) and grow with your business
- Automates Best Practices: Look for a loyalty rewards platform that automates best practices to engage customers and creates fierce customer loyalty.
Once you select the right loyalty rewards platform and implement it, here are the results you can expect:
Let me know in the comments section if you are a small business and have had good, bad or meh experience with loyalty programs.