It costs up to 10 times as much to acquire a new customer than to keep an existing one. This is a widely quoted statistic, not least of which from the Wiser eCommerce Blog. Yet, there exists a yawning gap in how small businesses are addressing this fact. According to a joint study by BIA/Kelsey and Manta, a mere 34% of SMBs have a loyalty program.
Even for those who do, it isn't getting done right. A recent study by Colloquy showed that over half of customers who begin using a loyalty program do not see it through the end.
However, small business owners are starting to take note. According to the same study, only about 14% of SMB owners now spend the majority of their annual marketing budget on acquiring new customers, a significant shift from only two years ago when "SMBs heavily prioritized customer acquisition over retention."
The ways they're doing it are improving as well. In case you didn't know, loyalty programs are going mobile, tapping all the potential of modern marketing in one go – a huge impact of social and, specifically, mobile marketing in this day and age (we discussed this in another blog post).
For example, LevelUp is self-proclaimedly (yet believably) saving your business from "zombie customers", reviving over 20,000 of them and returning $750,000 worth of business to their clients. Perka on the other hand is an app that is laser-focused on making loyalty programs stick, unlike cards that so easily get lost or used as not-so-convenient tissue paper (Perka is also consistently ranked as one of the top 10 essential apps for small businesses). There are just so many ways, means, and reasons to launch a loyalty program in today's world that it just does not make sense not to.
Still not convinced? Here are even more statistics, courtesy of Wiser.
-More than half of the top retailers have loyalty programs.
-A whopping 95% of people who use loyalty programs say they would continue using them.
-Returning customers spend over two thirds as much as new customers on average.
-There is an average of 23 loyalty memberships per household (so make yours stand out).
-More than two thirds of grocery spending happens at the consumer's "favorite store."
-If done properly, loyalty programs can effectively drive website visits and social media engagement, and also collect information useful for further marketing efforts at a fraction of the cost.
Above all, as former Tesco CEO Sir Terry Leahy puts it, "It was a thank you, pure and simple." And as we all know, customers most relate to personal, sincere, and rewarding engagement from the brands they choose.
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