When you’re setting up a new business, think about whether a customer loyalty scheme would work for your business model, and how you might be able to incentivise and reward repeat business. It may be that your customers accrue points for every purchase that they make, entitling them to a free product when they reach a certain target. Perhaps you can offer a discount once a minimum spend threshold has been reached? Loyalty schemes come in all shapes and sizes, so there is sure to be one to suit your business.

1. How Small Businesses Can Boost
Sales With a Customer Loyalty
Programme
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2. When you’re setting up a new business, think about
whether a customer loyalty scheme would work for
your business model, and how you might be able to
incentivise and reward repeat business.
It may be that your customers accrue points for
every purchase that they make, entitling them to a
free product when they reach a certain target.
Perhaps you can offer a discount once a minimum
spend threshold has been reached?
Loyalty schemes come in all shapes and sizes, so
there is sure to be one to suit your business.
www.startupsuccess.co.uk

3. There are many advantages to a customer loyalty
scheme. It can allow you to:Retain existing customers
Initially a loyalty program provides an incentive for
customers to make a repeat purchase, but a loyalty
program also increases customer engagement and
enthusiasm, especially once customers begin to
redeem their rewards.
Move customers up a segment
Designing your loyalty scheme to reward higher
spending, for example by incentivising a minimum
spend threshold within a specified time period, can
move your existing customers from one spend segment
up into another. Your loyalty program may persuade
them to try more expensive products or services if they
feel that the rewards will be greater.
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4. Win back previous customers
It is often easier to win back previous customers than
to attract completely new customers, especially when
you’re offering rewards. When you set up your loyalty
scheme make sure you get in touch with any previous
customers, even if you think they will have begun
using another business.
Increase Customer Lifetime Value
CLV, or customer lifetime value, is now recognised as
an important factor for the health of your business.
The customer centric view of business means we
should be focussing on how much a customer will
spend over the course of their relationship with our
businesses, rather than looking at how much we can
get them to spend right away.
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5. Attract new customers
Satisfied customers that feel they are
benefiting from your loyalty scheme will
become brand advocates and will
recommend the scheme to their friends
and colleagues.
While the main point of your loyalty
scheme should be to retain and upgrade
existing customers, attracting new
customers can certainly be a side
benefit.
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6. Characteristics of an Effective Loyalty Scheme
An effective loyalty scheme should be targeted
towards the segment of your customers that
are likely to make multiple purchases.
It should also be designed to encourage
customers to try new products or services that
they haven’t used before, rather than simply
repeating the same purchase over and over
again.
Finally your loyalty scheme should provide
enough of an incentive for customers to return
to your business, even when it may be cheaper
or more convenient for them to go elsewhere.
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7. Shoe Shop Loyalty Scheme Case Study:
A successful local shoe shop specialising in branded
children’s shoes has a loyalty scheme, complete with
loyalty card, which gives customers a 5% discount on
their fifth pair of shoes, a 10% discount on their tenth
pair of shoes, a 15% discount on their fifteenth pair of
shoes, and a 20% discount on their twentieth pair of
shoes.
This works for their business as their target audience is
mainly parents of young children with continuously
growing feet, who will need to be buying shoes on a
regular basis, and are often buying multiple pairs at a
time in the form of school shoes, weekend
shoes, trainers, and wellington boots.
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8. The loyalty scheme encourages parents to return to
their shop, when in fact they need to pass at least
two other stores which sell the same brands of shoes
to do so.
As the shop also sells more expensive adult shoes,
the loyalty scheme actively encourages parents to
use their discounts to buy shoes for themselves, thus
making a bigger saving whilst increasing business for
the store.
A well designed loyalty scheme can make the most of
your biggest asset; your existing customers, and can
help you to build your relationship with them. Your
loyalty scheme should reward customers for trying
different products or services, and for increasing the
frequency of their purchases or their level of spend,
resulting in a higher customer lifetime value.
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9. For a free book on how to start and grow a small
business, go now to …
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