Your business is booming and you’re seeing loads of sales from new customers. You’re doing well, but could you be doing better? My honest answer is… yes. Now that your business is established, your goal is to turn those new customers into repeat customers. The fact is that most businesses get 80% of their revenue from 20% of their returning customers. Before we continue, let me hit you with some quick stats:
- Loyal customers buy more often
The likelihood of purchase increases each visit from 27% to 45% to 54%.
- Loyalty customers spend more
A repeat customer will typically spend 3-5 times more than a new customer.
- Loyal customers refer more business
A customer who has purchased from you 10 times refers 3 times more people who then convert 7 times higher than traditional paid campaigns.
Do your customers have a reason to be loyal to your business? While you think about it, let me tell you that after years of working in the industry, I know that an exciting and robust loyalty program is the best way to gain and retain customers.
The next question is, what kind of program is best for your business? Look at what you are trying to achieve with the program and set up key benchmarks that align with your goals.
For example, you could measure:
- Sales revenue
- Average order value
- Customer lifetime value
- Purchase frequency
- Cart abandon rates
- Customer retention rates
Once you’re clear on your KPIs, you can look at the type of program that will best achieve your needs.
Types of Loyalty Programs
1. Points Loyalty System
This program suits businesses encouraging frequent short-term purchases like cafes, pharmacies, or massage parlours. It’s great because it encourages repeat spending by working towards a goal. However, be careful of discouraging customers if the number of visits/purchases needed is too high.
2. Loyalty Card Program
If you want to inspire frequent, high-value purchases, then this is the program for you. This type of program is common with larger chains like Coles, Woolworths, and Myer. Members feel special when they get access to exclusive discounts, coupons and points – just make sure they remember to bring their card with them!
3. Cash-Back Loyalty Program
For businesses that want to encourage frequent, high-commitment shoppers, then rebate/cash-back programs are the way to go. A well-known rebate program that you probably know about is FlyBuys. If you use it, you’ll understand that these sorts of programs are easy to understand but expiry dates on points and lack of instant gratification can be off-putting to many.
4. Mobile Loyalty Program
A mobile loyalty program is where all businesses should be heading, in my opinion. A lot of innovative businesses (Sephora Insider, Starbucks and AMEX Plenti Rewards) are adopting this tech – and it’s no surprise when you consider the amount of data and insight it gives you.
It’s time to go mobile
It’s 2019 and although many businesses still use physical loyalty cards (or even those punchcards they used to have at Starbucks), the days of these wallet-stuffers are numbered. At The Playhouse Group, we’re seeing an increasing shift in the market, with companies migrating from printed cards to cloud-hosted system and eWallets.
The cloud-based loyalty space is crowded and is growing rapidly. That’s why it’s crucial that you step up your game with a solution that covers your customers both online AND offline.
We’ve recently run RFI’s for clients like ILR and Camerahouse to help future clients (like yourself) make an informed purchasing decision. So, what are you waiting for? Get in touch today.