How to build a loyal customer base for your business

It’s easy to fall into the trap of only focusing on attracting new customers to your business and forgetting about celebrating the ones you already have. A customer loyalty program is designed to validate and inspire customers who already use your business, and hopefully, inspire them to return as well.

No matter how big or small your business is, loyal customers have been proven to add value, with 67 per cent of existing customers spending more than new ones. Here’s how you can create a business that customers fall in love with.

Customer loyalty programs generally conjure up images of point collecting (for example, frequent flyer programs) and punch cards (buy ten, get one free). However, there are many opportunities for you to implement effective and unique programs specifically for your small business that reward and motivate customers.

Builder Rory Wilkinson was inspired to create a meaningful loyalty program for his construction business after hearing what his mentor did for his own construction company. “He would collate all the instruction manuals of the various pieces of equipment, lighting, appliances and so on and get them bound. Then he would take the clients through a “handover” day, where he explained how everything worked, giving them the “House Instruction Manual” at the end,” Wilkinson explained. “It just made life so much easier for the client. They could just move in and start enjoying their new home straight away.”

When he started his own building company, Wilkinson considered what would be truly important to his clients and in the case of building a home – often a long, arduous process – it was also celebrating that “move in” moment. Wilkinson takes “before and after” photos of the build and has them put into a keepsake book, gifting that, a “decent bottle of wine”, plus a monogrammed leather key ring attached to the front door key.

These initiatives are specific to a building experience and that’s what makes them work – with Wilkinson frequently getting repeat business from his clients and word of mouth recommendations.

Along with one-off executions, 82 per cent of Australians admit they buy more from companies who have loyalty programs they are part of. If you’re interested in simply starting small and seeing how customers respond, consider how people use your business and what would benefit them. One of the most common and effective loyalty ideas is the “coffee card” initiative mentioned above – which sees customers collect a stamp or have a card punched each time they buy a coffee, with the tenth cup offered free. Tweaked slightly, this idea could easily apply to many small businesses. It encourages return business, validates the customer’s purchase and choice and motivates them to keep coming back – all for a very small investment.

Building on that however, General manager of Global Loyalty Sarah Richardson, told a Mastercard project that, “Customers need to be rewarded in an emotional way which includes anything that makes them feel special and with a physical program that rewards them with benefits, points and discounts. Separately, they create a shift in behaviour, which is increased when both are present.”

The key to a successful loyalty program is to create an idea that really adds value to your customers, while also ensuring the experience matches the discount or value add. After all, a great customer service experience lasts long after a discount has expired.

Creating emotional “warm fuzzies” with specific savings is something children’s shoe brand Plae agrees can have a big impact. They celebrate their unofficial brand heroes – namely, parents who share pictures of their kids wearing Plae shoes on Instagram – by re-gramming the images and celebrating the family. They also gift shoes to “micro influencers” – people who have great content and engagement, regardless of their follower numbers.

Social media manager Rachel Torti says Plae makes an effort to attract new customers with a discount – in their case, a 10 per cent sign on discount to their newsletter – and then retains and motivates them with exclusive or early access to sales. 

 

A 2017 study For Love or Money found that 81 per cent of customers buy more from businesses that have a loyalty program. Howard Schneider, an expert in loyalty marketing and a senior consultant for Kobie Marketing told Forbes Magazine that businesses that make an effort to not just create a loyalty program but go further, and create a special experience around it, are the ones who will really reap the benefits. “Savvy and strategic companies are now looking beyond these rewards programs to delight, create and retain loyal customers. They are looking to solve customers’ problems and soothe pain points.”

Business.gov.au recommends keeping up to date with legal and compliance issues of any incentive scheme you offer (such as tax obligations and privacy laws), and also suggests keeping your customer front of mind. “Research and understand your customer base so you can work out what types of loyalty programs will work for them,” they advise. “There's no point in making a customer loyalty program that isn't attractive to your customer base.”

Make sure your customers know about any loyalty program you offer. Whether it’s a discount offer, early access to sales, gift with purchase or points scheme – it will only work if it’s being used. Encourage your team and customers to share it with their friends and family too, helping to create future customers and loyal brand ambassadors.

Start here:

  • Ask customers – or add a line on a sign-up form – where they heard about you and send a voucher or discount code to the original referrer as a thank you.
  • Use an app to do the hard work for you. Perkville is one which focuses on customisable rewards, plus offers advice on retention best practice.
  • Offer customers a discount for any social media posts that tags your business – which has the added bonus of expanding your profile.
  • Align with complementary businesses and share discounts or value adds for your clients – for example, socks with shoe purchases, or how Optus and Hoyts have combined to offer cheap movie tickets to Optus customers.
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