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How to make more money in independent retail

Posted by Sureswipe on 2 May 2018

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 and entrepreneur, says that increasing customer loyalty can yield better profit for your shop over the long term.

“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:

 

The research:

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.

 

The results:

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.

 

The learnings:

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:

  1. 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%.

  2. 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.

  3. Incentivise staff to encourage promotion of 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.

  4. 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.

  5. 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 on your loyalty offering. This could help you identify where to strengthen training around the promotion of your loyalty programme.

 

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.

 

 

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Topics: gift cards, loyalty, retail, tips, Growing Your Retail Business, Mastering Marketing and Promotions