As competition in the retail space heats up, independent business owners need to focus on building loyal customer bases to grow revenue.
Independent retailers face growing competition from large, multi-outlet, franchised competitors.
Across the spectrum – from clothing to food to electronics – big businesses are stocking up on niche products to attract increasingly discerning customers.
With customers being spoiled for choice, it’s becoming harder to retain them.
How to fight back in an increasingly competitive retail sector
It’s proven that loyalty programmes can serve as an effective tool to retain customers because they still appreciate good value.
Sureswipe’s deep reach into the retail sector, as a leading supplier of merchant solutions, shows that loyalty programmes can boost revenue by 24% a year.
Multiple loyalty solutions to choose from
You can offer customers different rewards based on the type of retail outlet you run:
- Spend for rewards: Money spent equals money saved for the customer as you’ll be able to offer them a percentage of cash back on purchases.
- Points for prizes: With this sort of loyalty programme, you won’t offer cash back – instead you’ll give points that can be redeemed for in-store items.
- Punches for rewards: With Sureswipe’s professional punch card system, you can keep track of loyal customer transactions and reward them for buying similar items.
Expert insights on loyalty programmes
Derek Halpern, a globally-renowned marketer
“Loyalty also creates raving fans that promote your products for free and it’s cheaper than finding new customers.”
He advises, however, that simply launching a loyalty programme won’t differentiate your business enough to truly make an impact on revenue. It needs to be unique, tailored, and value-oriented in the eyes of the customer.
A SECRET WEAPON TO BOOST LOYALTY (AND CUSTOMER SPEND)
In one of Halpern’s blog posts, he notes that ‘artificial advancement increases customer loyalty’. But what does artificial advancement mean? He references a consumer research study to explain:
Two consumer researchers, Joseph Nunes and Xavier Drèz, conducted a customer loyalty experiment at a local independent car wash business.
How the experiment was set up:
- On two successive Saturdays, the pair handed out 300 customer loyalty cards
- 150 of the cards required customers to purchase eight washes to earn a free car wash
- The other 150 cards required customers to pay for 10 washes to get the free wash, but the car wash gave the first two car washes as a free bonus or head-start.
In both instances, customers were required to make 8 additional purchases before they could redeem their free car wash.
“The only difference was varying degrees of completeness. On one hand, customers were 0% complete, and on the other, they were 20% complete. During the next 9 months, 28 out of 150 people without a head-start earned a free car wash, but 51 out of 150 people with the head-start earned a free car wash. That’s an increase of 82%,” Halpern explains.
If you give your customers a head-start, they’re more likely to continue to use your products and services. Halpern says the key is that customers are more likely to complete tasks when they’re ‘closer to the finish line’.
HOW INDEPENDENT RETAILERS CAN APPLY THIS TACTIC
Artificial advancement works if there is a clear reason behind it. “In other words, you couldn’t just give it to people for no reason, you’ve got to give them the artificial advancement for a real reason.”
MARKET THE HEAD-START YOU ARE GIVING TO CUSTOMERS
Giving people a head-start without telling them why could adversely affect the results, according to Halpern. “I think the best way to make a noise about your loyalty programme ‘head-start’ is to offer it as a limited-time bonus. I like this route because you can use it when you just launch a new product or service. It will create hype and get people moving now instead of later.”
5 MORE WAYS TO MAKE YOUR LOYALTY PROGRAMME A SUCCESS
While artificial advancement can help you retain customers, Sureswipe’s Loyalty Success Specialist Brad Reilander says these five tips are essential to consider:
- Aim to sign up more than 20% of your customers
Factoring in sector averages of inactive loyalty members and typical customer
churn,is important to sign up more than 20% of your customers. Aim to attain at least 35% of loyalty programme shoppers – as inactivity and churn will reduce this percentage back to 20%.
- Train your staff to market the loyalty programme to customers
It’s ‘mission critical’ to have well-trained shop assistants who can ‘sell’ the programme to customers. The more enthusiastic and motivated your team is about the programme, the easier it will be for customers to understand the benefits of belonging.
- Incentivise staff to encourage
promotionof your programme
You can set a weekly target for sign-ups that are driven by staff interactions. You could consider a cash incentive for every 10 sign-ups or give away high-end merchandise that you know will drive your employees to brings in more business.
- Create vibrant, easy-to-understand posters for the programme
Promotional posters work well in conveying how your programme works and what’s in it for the customer. Use short bullet point lists, break down the benefits in short sentences, and alert the customer to quickly signing up while paying at the till.
- Test your programme with mystery shoppers
You don’t have to go out and hire a research team here. Ask friends, family or other like-minded entrepreneurs you know to pop into your shop and engage with staff
If you’re interested in boosting customer loyalty, driving up repeat purchases and making your store stand out from the competition, talk to us about a tailored Sureswipe Loyalty programme. Click here and we’ll call you back within one business day to discuss your needs.