Businesses pay a considerable amount of money when acquiring new customers. This metric is the “cost per acquisition” or CPA. It factors in everything from ad spend to product packaging.
As you can imagine, acquiring a customer gets costly.
Businesses retaining customers still pay the cost per acquisition, but grow margins in the long-term. The key metric is the “customer lifetime value.” Profit margins increase as customers return for products and services over time.
Loyalty Card & Rewards programs for SMBs, small-to-medium size businesses, are a way to increase the lifetime value.
These programs provide customers with incentives to keep them loyal. A small expense providing freebies may result in repeat sales and drive customer engagement.
Adding a loyalty program to your business is fairly easy. Read on to find out what to consider when implementing one and how to choose the best loyalty programs for growth and long-term profits.
Choosing Loyalty Programs for Small Businesses: Main Factors and Considerations
There are two paths when introducing a loyalty business program into your marketing strategy:
- Create it in-house
- Tap third-party platforms
An in-house platform gives greater control since you manage the system. Yet, this system may become a problem as the loyalty program grows. You’ll want to consider whether or not you have the necessary resources to scale with the demand.
If you consider using third-party platforms, research the different types of programs, such as:
- Points-based system — Customers earn points from their actions and redeem them for discounts
- Card-based system — Customers have a tangible item linked to your brand and incentivize in-store engagement
- Tier-based system — Customers earn more points/incentives from their engagement and sale history
- Fee-based system — Customers can opt-in to higher reward levels through a fee structure
- Coalition-based system — Customers enjoy the perks from several stores offering cross-promotional incentives
- Cash-based system — Customers earn cash back from purchases and business activities
- App-based system — Customers check in and engage with a mobile app to earn incentives
There’s no one-size-fits-all as each program offers its own range of pros and cons. What matters most is whether the program fits your business model, goals, and target audience.
Other factors that will influence your choice include:
- Scalability — Can the program adapt as its user base grows?
- Ease-of-use — Is the system easy to manage for operators and users alike?
- Support — Will you offer robust service and support?
- Referrals — Does it include a referral system to boost engagement?
- Compatibility — Can it integrate with your other services and support multi-location?
SMBs can start out with a basic program. This lets them test the system before a full scale implementation. If it is a success, most loyalty programs offer scaling options with higher paid tiers. Most Rewards programs have a “starter kit” for a low cost, and some don’t even charge unless you use it, depending on the POS you’re using for your card transactions.
Loyalty Program Types: Which Is Best for Your Small Business?
Consider how customers engage with your business before you begin:
- Social media
Each payment gateway creates an opportunity to promote your loyalty program. E-commerce and social media both tap content, while in-store interactions need pitching or print items featuring the program.
Consider your advertising strategies too. The referral systems in loyalty programs may reshape how you promote the business.
An important consideration is how well the program integrates with POS systems. A program’s integration means automatic customer tracking. This tracking makes it easy to reward and redeem loyalty points.
How to Integrate a Loyalty Program into Your Business and Win More Sales
It’s time to add a loyalty & rewards program given that it meets your requirements and parameters. This requires finesse, but most providers offer guides and setup services if you hit a snag. If your Loyalty Program is tied to a credit card terminal, WPP can set it all up for you.
If Online, your tasks will involve:
1. Add the Program Software
If your Loyalty Program is web based or through an app, visit the program’s website and opt-in to the tier best suited for your budget and needs. Upon sign-up and/or payment, you’ll receive access to the systems’ backend or app.
Follow the prompts and add the loyalty system to your business. This may include a simple integration into the payment system. Or install it via a plug-in on your business website.
Use the developer’s tutorials and documentation to overcome learning curves. Get help from professionals trained in the app’s implementation if necessary.
2. Develop the Program’s Backend
Next, choose how the system works:
- Setting points per action and prize levels
- Creating content and supportive content
- Branding and ordering the loyalty cards
- Developing or using their white-label app
Take the time to test the program in-house to address issues and hangups. Roll out the program to a select group of customers for feedback.
3. Setting Rewards and Incentives
Consider the purpose of your incentives:
- Encourage larger sales volume
- Off-load back stock
- Boost brand awareness
- Improve customer service
The rewards and incentives should align with your business goals. The goal often involves sales and branding. But you can use the program to align with company values too.
Common rewards and incentives include:
- 5 percent to 10 percent discount for every $100 spent
- $5 to $25 off purchases $100 or more
- Earning a freebie after X number of purchases
The amount depends on your profit margins but should account for the competition.
4. Creating Member Engagement
Great loyalty programs are more than a gamified chance for discounts. They could become a branded asset alongside your business.
To encourage sign-ups, offer:
- A big, first-time discount
- An easy tier-1 reward
- A flashy and engaging design
- A referral incentive
Tap your existing customer list and foot traffic to grow the program. Then, create engagement by offering exclusive deals. Mix in customer experiences on social media to promote the program through storytelling.
5. Scaling the Program’s Growth
The referral system plays a crucial role in the program’s growth as it:
- Gets picked up on coupon/discount sites and forums
- Taps referral marketing, niche sites, and marketers
Referrals drop operating costs from advertising expenses to payment processing. Make the system seamless with brand engagement and the lifetime value will grow. Your passionate customers become salespeople with the program!
Make the Loyalty Program Work for You
Loyalty programs for SMBs are a huge undertaking. Adding one requires management as failing to engage loyal members resets their interest elsewhere. Commit to your loyalty program if you choose to explore this opportunity.
Ready to scale and grow your business? Wholesale Payment Partners is here to help!
Don’t hinder your business opportunities by forgoing tech integration. Explore our merchant services and create an ecosystem primed for loyalty programs.