Why Small Businesses Should Be Utilizing Customer-Loyalty Programs? Free Essay Example

The philosophy behind a customer loyalty program is simple: Repeat customers are rewarded and businesses increase sales. It’s a basic but powerful strategy.

For instance, My Starbucks Rewards, the coffee giant’s customer-retention program, significantly contributes to the company’s record growth.  Starbucks claims that the program played a key role in its  in total revenue in 2013’s second quarter fiscal results.  

Best Buy also turned to customer loyalty after experiencing stagnant revenue growth year after year in its brick-and-mortar stores.

To keep up with major online retailers like Amazon.com and eBay, Best Buy increased reward points from  last year to motivate customers to keep coming back. This strategy along with additional changes has helped the company’s

Whether the goal is to continually increase sales or to jumpstart sluggish revenue, customer-loyalty programs appear to have become a staple for many large corporations. But what about small businesses?   “Achieving Big Customer Loyalty in a Small Business World” reveals that for early adopters who already have a customer loyalty program in placed, 64 percent of them report it’s been been effective, meaning it makes more money than costs to maintain it.

It’s important for business owners to keep in mind that customer loyalty isn’t just for big businesses – a well-designed program can help any size business scale and reach new heights.  

Here’s why customer loyalty programs matter to small business:

A repeat customer gives and gives. Having a customer-loyalty program could help you increase repeat customers, which, in turn could boost your business’s revenue. Based on the same report by Manta and BIA/Kelsey, a repeat customer spends 67 percent more on a given purchase than a new customer does. And they should be rewarded for this action, as retaining customers is less costly than acquiring new ones. By providing loyalty programs for current customers, small-business owners are not only saying thank you but are also motivating them to continue to be their brand ambassadors. They can easily spread the word about a business to their professional, personal and social networks, helping small-business owners increase their customer base even more. 

Rise above the competition. It can be difficult for a small business to compete with a large brand considering that most large brands have more locations, resources, marketing dollars and the ability to offer lower prices. However, a good customer-loyalty program is an easy way for small businesses to show their personal side and remain competitive in spaces dominated by big business.

For example, many consumers may not love the coffee at a big-brand coffee chain but do love the fact they can earn points through their purchases and save money in the long run.  However, it would be very simple and cost effective for a small coffee-shop owner with quality coffee to do the same.

Customer loyalty doesn’t cost a fortune. Customer-loyalty programs don’t have to drain small businesses’ budget. While some corporations spill millions of dollars into loyalty programs, small businesses don’t have to follow the same tactic to achieve promising results. In today’s mobile era, cost-effective digital rewards programs are just as fruitful as the ones put in place by bigger players. , a digital-rewards mobile app, enables small businesses’ customers to earn points on their purchases by simply using their smartphones. Similar services include  and , and subscription price starts at as low as $50 per month. Small-business owners no longer have to waste time and money printing cards and buying ink when they are using digital customer loyalty programs. More importantly, they’re making it easier for their customers to keep using their service. Here’s to the end of losing paper punch cards in a pile!

Customer-retention programs are not just for big brand name players. They can provide many benefits for small businesses, such as increasing sales, helping them stand out and developing a stronger relationship with their customers — and technology is making it easier and cheaper than ever before to launch one.