Do You Offer Incentives to Encourage Loyalty? Three Reasons You May Want to Start
One of the best ways for businesses in the modern world to remain competitive is via a customer loyalty program. While customers see these programs as a path to some benefit, the obvious goal for the business or brand is to encourage repeat business by offering an incentive. The most commonly used loyalty programs let customers take advantage of special rewards available only to members, typically by collecting points that they can later trade in for discounts or free merchandise.
Loyalty programs often feature multiple tiers with different benefits and rewards at each level, which makes the system more competitive and encourages greater and greater spending by those who are most loyal to the brand. Let's take a look at a few excellent reasons to offer incentives to your customers to encourage their loyalty – and their repeat business.
Build a Positive Reputation
You've likely heard the old adage that states "Any type of advertising is good advertising." Whether you have one shop in a small town or a string of shops spanning multiple cities, it only takes one bad review to watch your profits drop. When a customer is upset over how a retail worker acted or if an individual decides they dislike the high prices in one of your stores, those shoppers will talk to others about their experiences which can cause significant future problems. Implementing a loyalty program will make shoppers excited about collecting points and receiving benefits, which will in turn help to provide a more positive reputation around your business and brand.
Limit Your Advertising Costs
Few businesses can succeed without some form of advertising. Whether it's placing an ad in the local paper, advertising on the sides of buses or sending out flyers in the mail, those companies need to find ways to get encourage customers to come into their stores. A loyalty program serves as a type of inexpensive marketing, which can in turn help you cut back on your advertising expenses. For example, collecting email addresses during the loyalty program sign-up process allows a business to have a direct line of marketing to those individuals who have already made a purchase. Sending these emails costs very little, so the return on the investment is high.
Find Out What Sells
Purchasing the wrong stock selection – one that customers aren't interested in purchasing at retail prices – limits the profits of a business. To get rid of that surplus, the shop then needs to discount prices, potentially losing money along the way. With a loyalty program, a business can learn exactly what products which products customers are keen on purchasing – including testing out future offerings before committing to a large stock purchase.
Loyalty programs are an excellent way to grab the attention of customers and keep them coming back to a store. Those programs also come with a number of benefits and help shop owners find out what sells and limit their operating or overhead costs.
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