The idea behind a loyalty rewards program is to offer incentives and rewards to trigger repeat visits from your customers. Study after study has shown that it’s a cost effective way to increase revenue since the amount of money repeat customers spend far outweighs the cost of the rewards themselves. A loyalty rewards program isn’t right for every type of business, though. To see if a loyalty rewards program is right for your business, ask yourself these five key questions.
According to recent studies, 74 - 79% of consumers seek out loyalty rewards programs before making a purchase.
Is your business conducive to repeat visitors?
For most business types, the answer is probably yes, but some businesses simply don’t rely on repeat visitors. if you are a realtor, for example, most of your customers aren’t purchasing multiple homes, so a loyalty program probably doesn’t make sense.
How often would customers return in the best case scenario?
If your business is a restaurant or retail location, the best case scenario is every day. If you run a salon, then maybe once a month. An auto shop? Maybe once every 2 - 3 months for an oil change. All of these scenarios are perfect for a loyalty rewards program. If you’re a CPA, though, where clients only come in once a year to get their taxes done, maybe not.
Do you already have a loyal customer base of repeat visitors or do you rely mostly on foot traffic and new customers?
If your business already has a loyal base of repeat visitors that comprise most of your customers, a loyalty program won’t benefit you much—extra incentives won’t make those customers visit more often. On the other hand, if you only have a handful of loyal regulars and rarely see repeat visitors, loyalty might be the way to go, since it will turn those one time visitors into repeat visitors, where they’ll spend more.
Do you offer products or services that would make for good rewards?
Most rewards programs are driven by offering freebies (buy 5 coffees, get 1 free), discounts (spend $100 and get 15% of your next purchase), and special status (visit 20 times in one month and we’ll name your favorite menu item after you). In most cases, you can get creative and figure out a way to offer some sort of reward, but not always. A car dealership, for example, might be hard pressed to figure out meaningful and cost effective incentives for a rewards program.
Do you have a way to efficiently implement a rewards program?
The biggest obstacle to running a loyalty program is implementing it. Going the old school route and printing out loyalty punch cards is a pain, and often expensive. Luckily, digital loyalty programs like the one included in the SpotOn platform remove this obstacle by making it easy to create rewards, enroll customers, keep track of customer points, and process reward redemptions through the checkout process.
Need help finding out whether a loyalty rewards program makes sense for your business? SpotOn is here to help. Get a free demo today to speak to speak with an expert and see how a loyalty program would impact your bottom line.