We all know the importance of customer loyalty for every business irrespective of what industry they belong to. For startups and small businesses, it can be hard to attract new customers & retain them for a long time but a good loyalty program can do wonders in engaging customers & making them stick to your brand over time.
Research by Invesp even says that it costs 5 times more to attract a new customer than to retain an old one. This clearly shows how important it is for small businesses to turn one-time buyers to long time repeat customers. In this article we will check out different types of customer loyalty programs and which one will be suitable for your business needs.
Reasons Why Businesses Must Invest in a Good Customer Loyalty Program
If you are new in the business world you may wonder what exactly is the customer loyalty program. A customer loyalty program can be defined as a tactic where a business offers rewards to its customers who make frequent purchases from the brand. This not only encourages them to repeatedly buy from your business but also helps in enhancing the overall growth of the business.
Here are some of the main reasons why a business must invest in a good loyalty program-
- helps in building stronger relationships with customers
- improve customer retention by rewarding them regularly
- boost repeat business with specialized offers and discounts
- enhance customer lifetime value
- higher customer satisfaction
- boost the revenue of your business
If you belong to a small business in a stiff competitive market, a good loyalty program that offers rewards to returning customers can be a way to differentiate you from your competitors even big brands.
Types of Customer Loyalty Programs For Small Businesses
Before investing in the Best Customer Loyalty Rewards Programs Software for Small Businesses, you must know the type of loyalty programs that work differently and offer different rewards. Here are the main types of customer loyalty programs to help you choose from for your business needs.
- Point-Based Loyalty Program
The most common type of program is the point-based customer loyalty program where customers some points when this pen during their purchase of products and offerings from your business. The same can be redeemed on various things such as discounts on the next purchase, special offers, exclusive events etc.
The best thing about using point-based programs is that they help build customer loyalty by encouraging repeat and regular purchases from customers as they can build up their points. However, customers need to accumulate thousands of points to qualify for a reward and this may be one reason why these programs may disappoint some customers.
- Mission-Based Loyalty Program
The next program type that we will discuss is a mission-based loyalty program that enables customers to feel that their purchase or use of your products will help in making a difference to improve the world. One example is Whereby which has a program to plant a tree for every video meeting held on their platform.
This program type can be more beneficial when you partner with a non-profit organization that aligns with your mission. Having such a program is the smart way to differentiate yourself from other brands in the competition and people might start using your product to create a positive impression.
- Subscription-Based Loyalty Program
Another program that you can use to turn your one-time customers into repeat purchasers is a subscription program. In this program, customers will pay some charges to enjoy exclusive reward offerings, discounts and services that are not available for non-subscribers.
For instance, if your business sells products that are consumable like food or drinks, a subscription plan can be a good option as there will be a high chance for regular or repeat purchases. This type of loyalty program provides special benefits to all their subscribers encouraging them to stick around and enjoy unlimited benefits.
- Referral-Based Loyalty Program
These program types help customers get rewards or special discounts for referring their family and friends & bringing in new customers to the business. One example is Mahabis, the company with a refer-a-friend loyalty program that offers different referral offers for different locations. For customers in the USA, they offer a 10% discount for you and your friend whereas for customers in the UK, they offer a €10 discount.
This program can be a great way to gain trust with potential customers, especially for businesses belonging to e-commerce and DTC as they don't have physical stores for customers to visit and check products before they buy.
- Community-Based Loyalty Program
The last type of loyalty program that we will discuss is a community-based loyalty programme which helps in bringing together like-minded customers who share similar interests, hobbies or challenges. It helps them keep engaged and learn with one another and your company.
These program types will not offer rewards to their customers like discounts, special offers or reward points. Rather they will offer a chance to connect with light-minded people. From sharing tips on how to use your product offerings to learning about their lives, these communities can make a huge impact on your customers’ lives making your brand differentiate from the other competitors.
Closing Statement
We have learnt how important it is for a business to have a well-executed loyalty program for their business needs and keep their customers coming back for more. However, as a small business owner, it can be difficult to invest huge resources just like big companies. So the best way is to choose the right loyalty program type that will work for your specific business needs. This means you need to understand your customers first like what motivates them they are buying habits and how they can get the maximum value from your business.
If you are looking for the Best Customer Loyalty Programs Management Platform Software, Clavax can be the right partner that will help you know your specific business needs and help you choose the right program setup to get the best results for your business as well as your customers. Connect with the loyalty experts as they can offer you different loyalty program options to choose from & boost customer loyalty growth in no time.
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