Still, we understand that setting up and maintaining a customer loyalty program can require a lot of time, effort, and in some cases, money. In this blog post, we’ll explain what a loyalty program is and list typical pros and cons so that you can determine if pursuing business loyalty programs is worthwhile.
What is a Customer Loyalty Program?Companies of all sizes create loyalty programs that reward their return customers. The purpose of a loyalty program is to keep customers coming back and incentivize them for doing so. For instance, customers earn redeemable points for each purchase they make, and then get a free item or discount after they spend a certain amount. Based on your business’s industry and what you sell, you can create a personalized experience that benefits you and your customers. Next, let’s review the most common pros and cons that come with starting a customer rewards program for your small business.
The Benefits and Downsides of Customer Loyalty Programs:
Pro: Your Customers Will Have an Incentive to ReturnIf customer retention has been an issue for your business in the past, creating a loyalty program could be a beneficial solution. Customer loyalty programs often inspire customers to become loyal buyers. They feel like their patronage is appreciated, so they continue to do business with an establishment that offers them long-term rewards. Even if a customer appreciates your products or services, you may not always be top of mind. Therefore, implementing a rewards system that could keep customers engaged with your business and create a better overall customer experience. A proactive way to use your rewards program to engage customers is to send them monthly emails informing them of how many reward points they’ve earned. This reminder could encourage them to make more purchases!
Con: You’ll Have to Monitor the Loyalty ProgramBy offering a reward program for your business's customers, you’ll be able to gain customer loyalty, but you’ll also have to put in extra effort to set it up and maintain it. For instance, you may need a technological system to track customer data, such as the award amounts they’re accumulating. In addition, you’ll need to send out emails or letters to customers that have earned rewards. This could take away time (and resources) from other areas of your business, so make sure you consider this prior to starting a loyalty program. If you don’t maintain your customer loyalty program, you could alienate loyal customers. Therefore, you should be confident that you or your employees have the time and appropriate resources to maintain the loyalty program before implementing it.
Pro: It Could Increase Transaction AmountsIf customers are trying to get a discount, free item, or another exciting incentive, they may be more likely to make larger or more frequent purchases. In fact, according to the Bond Loyalty Report, 66 percent of shoppers spend more money in order to take advantage of their loyalty program benefits. By offering customers the option of enrolling in a loyalty program, you may see a notable boost in sales!
Con: It Might Be Time-Consuming to StartNot only does setting up rewards accounts take away from other initiatives, but if you have a digital loyalty program, it may require frequent monitoring. This will all depend on the type of loyalty points system you use. To avoid this, consider an automated service that will save both you and your customer base valuable time. Below, you’ll find a few examples of companies that provide customer loyalty, point of sale, and referral software solutions:
- Currency Alliance
- Kangaroo Rewards
- Loyalty Gator
- Preferred Patron
- Social Spiral
Pro: It Could Help Promote Your Business’s BrandStarting a reward program can offer a strong branding opportunity for your business. Whether it’s incorporating your business slogan into the program name or decorating the punch card in your company's colors and logo, your rewards program can reflect your branding. Aside from incorporating your business branding into your loyalty program, you can promote it on the following platforms:
- Social media
- Your business’s website or blog
- Your business's mobile app
- Email newsletters
- Direct mail campaigns
- In-store marketing