Why small retail businesses should implement a loyalty program

Posted on November 13, 2019 by Carm McCormick
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Why small retail businesses should implement a loyalty program

Posted on November 13, 2019 by Carm McCormick
 

Your stores’ greatest assets aren’t sitting on the shelves or even standing behind the counter: it’s walking through your doors each and every day. 

We all know the importance of building and retaining our customer base.  And of course, implementing a loyalty program is a go-to strategy for many retailers – most national chains have a program. Many medium-sized retailers consider a program but never implement one.  And sadly, few small retail businesses ever consider one.

It’s just too complex, too daunting, too much of an investment for small local or regional retailers.  But what if it wasn’t? What if there was a way that any retailer of any size could implement a loyalty program?  How exactly do you go about that? 

I’ll let you in on my method: in a nutshell, it starts with a digital approach, incorporates custom touche points from your industry and clientele, and is all brought together with some professional polish. 

Here’s how to go about it.

Decide what’s important to you for a loyalty program: start with customer data.

Your loyalty program framework should benefit your customers as a perk, but ultimately, it needs to benefit you first—otherwise, the ROI of the program’s maintenance starts to invert over time. 

Consider the customer data you currently collect, trust, and use to inform key business decisions like stock ordering, operating hours, staffing decisions, seasonality, financial forecasting, etc. All of this data and more can be pulled from your sales data, but with the right loyalty program set up with the right data points will give you the ability to learn so much more about your individual customers and their buying habits.  

Drilling down into customer demographics, purchase history, frequency, average sale size, etc. will help you better align your sales strategies with your sales goals. 

And so from a strictly practical standpoint, figuring out the objectives you have, the types of decisions you will want to make, and the data you need to help you make those decisions will help you front-load corresponding questions during customer signup and plan out a loyalty program that will give you the right data points.

While core information about your customers — name, gender (if they are comfortable sharing), date of birth (for custom promotions and to determine age), address or FSA  (to layer 3rd party data to build profiles around household income, marital status, and family status), email (to build email lists and lists for lookalike audiences)—should be included, don’t be afraid to weave in some “one-off” questions as well. Asking your customers, for example, their favourite new product in the store or other places they love to spend their time and money can point to future targets.  

A word of caution with customer responses – many studies show that many customers tend to be untruthful in their responses to questions about spending and shopping habits – so having strong consumer data that indicates behaviour is always more trustworthy than polled responses.

Next, observe the way your customer’s shop.

Not-so-shocking-secret: your customers need to actually want, sign up, and then use your loyalty program in order for it to start producing and delivering that all-important data. That means, at least on some level, you’ll need to make it easy for them to do so. For example, I live and breathe by my smartphone, which means that a loyalty program that is only available through a website is a no-go for me. I know, sounds crazy, but some brick-and-mortar stores still use easy-to-lose punch cards or complicated online logins because it’s what’s easiest for them.

A good rule of thumb is to set up your loyalty program memberships to tie to your customer’s cell phone number. It’s one piece of information they aren’t likely to forget or misplace, and it can always be entered manually if a physical card or app is unavailable. (As an added bonus, provided you have permission, this information can also be used for promotional SMS roll-outs.)

Promote enrollment vigorously.

Once your loyalty program is ready for debut every customer should know about it, and you’ll have to tell them about it and its benefits many times forever.  So that means signage in your store, at the checkout, and prominent mentions in any newsletters and emails that you’re already sending out. Again, make the program worth their time and attention and make signup easy! 

Setting up an automatic “text bot” can push a download link or a Play/Apple Store app when your customer texts a specific phrase to a specific number. Scannable QR codes can also lure in new enrollees from storefront posters, ensuring the program information is available even if your store is closed. If you have a blog, include the program as its own entry, and make sure there is a clear signup link on the bottom of your website as well as on all of your social media profiles.  Lastly, don’t forget digital remarketing where you can cost-effectively advertise the new program to those who have visited your site in the recent past.

If it’s in-budget and appropriate for your brand, a giveaway or discount incentive is an excellent way to encourage signups to your new loyalty program. If a customer at the register that’s already poised to buy knows that they can save a little on their purchase, they’re very likely to take action before they check out. 

The same holds true if a time-sensitive offer is tied to signing up, or signing up is contingent on entry into a generous giveaway of your products. While they’re taking a short term action for immediate gratification, you’ll reap the lasting benefits of freely-offered customer data.

Finally, assess and fine-tune your loyalty program each quarter.

For programs of this nature, fiscal quarters are an excellent milestone for reviewing your data, KPIs, and milestones for the customer loyalty program in-depth. How many signups since your last assessment? How successful were emailed promotions among your loyalty signups? How popular were text message discounts for the same group? Were there any demographic patterns, such as more women, or more individuals in a certain age group buying a specific item? These insights can inform everything from where to set your prices to the way you plan out your future marketing and relevant blogs, tweets, and social media posts. Tracking both the performance of the program and the quality of data collected from customers quarter-by-quarter, year-over-year, will also help determine reasonable ordering numbers, cut back on wasted or outdated stock, and give you the intel needed to determine the success of your sale and promotional strategies. 

Your loyalty program should, at every facet, reflect your business and the way you interact with your customers currently. While you should definitely look into trends and tech, in the same breath I’d urge you to stay true to your roots, too. Loyalty programs, when rolled out in a clumsy or one-size-fits-all manner, can feel cold or impersonal to your already-loyal customers: do your homework, proceed with eyes wide open, and soon you’ll be rolling in rich, actionable data.

Looking for advance retail strategies?

Growing a small retail business has a unique set of challenges.  And in the planning of any retail space, your growth plans, retail environment, customer base, and merchandise are unique to you.  If you’d like to discuss your next store, or your next 10 stores, drop us an email or give us a call.