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Customer loyalty programs improve the brand experience. According to research, over 70% of consumers who are loyalty program members say that membership is a crucial part of their relationship with businesses.
Fostering loyalty is critical since many customers are giving up on old and developing new habits. They are shifting their attention to the online world, where different products and services are available. A recent study revealed that U.S. customers would spend $1 trillion online in 2022.
A rewards program for small business can be a great way to encourage customers to purchase from your brand. By signing up for a digital rewards program, customers can earn points and get rewards regardless of their shopping preferences.
It is imperative as customers spend more time online using their mobile devices. With a rewards program in place, you can be sure that your customers will keep returning for more.
PassKit is a loyalty platform provider that helps you deliver exceptional online and offline customer experiences. We enable you to create a reward program that works with Google Wallet and Apple Wallet. Consumers don’t need physical cards to get loyalty rewards—we store everything on their mobile wallets.
In this article, we’ll explain why you must create rewards programs for small business and how PassKit helps you along the way.
What is a rewards program for small business?
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A rewards program for small business allows existing customers who frequently purchase your products to earn points and redeem them for rewards.
It is a business tactic to encourage shoppers to buy as much as possible from a brand. These rewards programs have numerous benefits for your business. Let’s discuss the most important ones.
The key benefits of creating a rewards program for small business
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You must reward loyal customers for choosing your brand over so many others. Let’s see what you can get from creating a rewards program:
- Increased customer engagement – customers agree to receive marketing emails and other content when they join rewards programs. It increases engagement and strengthens the relationship between companies and consumers. They will engage with your content more when they might earn rewards.
- Improved customer experience – consumers form their opinion of your brand from the moment they interact with you. As a small business owner, you can influence their opinion by giving them rewards, discounts, and gifts. According to PwC, 65% of customers say that a positive brand experience is more influential than advertising.
- Increased customer retention – rewards programs for small business are a practical part of a customer retention strategy. Who would want to leave a brand whose loyalty program awards them?
- Increased sales – loyalty programs are attractive incentives. Even those customers who didn’t plan to purchase from your brand on a specific day would change their minds if they got loyalty rewards. As a result, you’ll see a growth in sales.
- Create brand advocates – consumers with loyalty cards for business become brand advocates. They share their stories with family and friends, expanding your audience base. You don’t have to use any referral marketing software. When your customers are happy, they will help you acquire new customers, increasing your sales.
Do you wonder how customer loyalty programs work? We have the answer you need.
How do customer loyalty programs work?
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You must understand how a loyalty program works to take advantage of its benefits. Here is a brief explanation:
- Companies first set up rewards programs using customer loyalty software like PassKit. The tool helps you create and design your loyalty program with just a few clicks. It is much easier and cost-efficient compared to custom app building.
- Brands launch customer loyalty programs. They distribute physical cards to customers or opt for a digital solution that makes the program available to shoppers on their mobile devices.
- Companies decide which incentives to offer customers to thank them for repeat business. Shoppers can earn reward points, a special discount, or a gift.
- Customers visit a brand to purchase products or services. They show their loyalty program cards during each transaction. The system logs their purchase and ensures they accumulate reward points.
Customer loyalty programs help consumers save money and profit from their loyalty to your business. It all depends on the incentives you offer, however. Let’s find out which benefits you can come up with.
5 examples of incentives or rewards for customers
The most popular incentives or rewards you can offer customers are:
- Price reductions – give consumers a chance to purchase their favorite products or services at a lower price. Offer discounts frequently to encourage customers to return to your business.
- Free products or services – loyalty programs exist because of customers. Remind them you care about them by giving them a free product or service. Whether you own a nail salon, gym, hotel, or restaurant, you can consistently offer something for free.
- Loyalty points – most customer loyalty programs enable consumers to earn reward points. Once they accumulate a specific amount, they receive a discount, gift, or other.
- Vouchers or coupons – inform consumers they will receive a voucher or coupon when they accumulate points. It can encourage customers to make frequent purchases.
- Exclusive access to new or limited edition products – all businesses operate in a competitive market. To make your new or limited edition products stand out, give them to your loyal customers.
Do these rewards have an impact on consumers? They sure do!
How do rewards impact customer spending behavior?
Customer loyalty programs have the power to get consumers to shop more. Small businesses that manage loyalty programs launch incentives for one reason – to increase revenue and sales.
Rewards encourage customers to keep returning to your small business. According to research, consumers who make repeat purchases spend 67% more on average than new customers. It proves why you must nurture relationships with current customers.
Loyalty programs also increase consumer purchase frequency. Reward points, discounts, and vouchers influence them to buy more often to take advantage of an incentive.
Are there any restrictions on rewards in a customer loyalty program?
Yes, there are. Every incentive small businesses offer has some terms and conditions. They apply to all customers who want to redeem a reward. Here are the two widely used restrictions:
- Points and vouchers have an expiry date – imagine that members of your customer base see your loyalty campaigns. They decide to make frequent purchases to receive points and coupons. After some time, they go to redeem them only to find out they have expired. You won’t attract new customers if they read online reviews where people complain about expired incentives.
- High-threshold requirements – taking months to earn loyalty rewards is off-putting to people. They want to benefit from their purchases shortly, so we suggest you avoid this requirement.
Your reward program can increase customer retention and catch the attention of potential customers if you don’t impose too many restrictions. The terms and conditions should protect your brand while giving consumers freedom.
4 types of businesses that benefit from a customer loyalty program
A customer loyalty program is an excellent way for companies to keep their customers returning. It’s especially beneficial for businesses operating in industries where customer retention is critical, such as the following:
- Food and beverage – restaurants, coffee shops, and bars embraced traditional paper punch cards long ago. Their customer base would receive every fifth coffee, seventh burger, or tenth cocktail free. However, times are changing. Many people opt to pay with Apple Wallet or Google Pay rather than carry wallets or physical cards. Businesses in the food and beverage industry leverage PassKit to digitalize their customer loyalty programs and respond to consumer needs.
- Cosmetics – having reward programs in this industry is crucial. You can boost sales when you offer incentives like free makeovers, access to exclusive events, or free shipping on all orders.
- Beauty – the beauty industry is brimming with small businesses that follow consumer trends and provide customer loyalty programs. Customer loyalty software helps nail salons, hairdressers, and similar businesses to keep track of data, monitor rewards, and launch incentives.
- Travel and tourism – airline loyalty programs have been around for a while. They offer customers a chance to earn airline miles to get discounts or free tickets. This is a competitive industry, so having a unique customer loyalty program can attract more consumers.
Bringing your loyalty program online is easier with customer loyalty software like PassKit. We let you build your reward program regardless of your industry. Whether you need hotel, airline, nail salon, or restaurant loyalty programs, use PassKit to create and launch them quickly.
All you need to do is start your 45-day free trial.
Let’s see why your small business should reward existing and new customers.
9 reasons to create a customer loyalty program
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It takes time and effort to build customer loyalty. However, having rewards programs for small business helps you win consumer trust easily. Here are nine reasons you should create a customer loyalty program today.
1. Revenue growth
It’s no surprise that customer loyalty is a factor that influences revenue growth. The more consumers love your business, the more repeat purchases they will make.
Customers will purchase the items if they are one or two products away from accessing unique rewards. Companies must manage loyalty programs so their incentives make people buy more. It is the only way to grow revenue.
2. Increased referrals
You can include a referral program to reward customers who spread the word about your brand. Consumers are more likely to recommend small businesses after a unique experience. They will do that more when custom rewards await them.
The following statistics show how important referral programs are:
- A referred customer is over 15% more loyal than a consumer you acquire by other means
- Referred consumers are four times more likely to bring more customers to your brand
- Referral programs increase the customer retention rate by 37%
Offering rewards and incentives is more effective than you think – it can attract new customers.
3. Reduced customer acquisition costs
It’s no secret that the costs of acquiring new customers are high. Small businesses often have a hard time getting to the new audience base. However, you can lower your customer acquisition costs by relying on your referral program.
Customers spending time on your brand already know what you offer. They can refer your business to new customers if you impress them.
If loyalty programs reward customers, it ensures they turn into brand advocates. As such, they attract people to small businesses.
4. Improved customer retention rates
Existing customers will support small businesses for a long time if they feel valued. Loyalty programs show you respect them and want to thank them for doing business with you.
When you treat consumers right, they will pick you instead of competitors. Come up with different rewards and offer gifts to increase customer retention rates.
5. Increased brand loyalty
Rewards programs for small business build trust by creating a satisfying and unique customer experience. A long and successful relationship between a customer and a business increases brand loyalty.
As a result, you stand out in the crowd and gain a competitive edge.
6. Enhanced customer insights
You can’t know what customers expect from you without consumer insights. A loyalty program is helpful as it collects customer data to show you how consumers interact with your brand. Instead of guessing, you can make informed choices.
For instance, customer data shows how satisfied people are with your loyalty program or if they use rewards points or coupons when purchasing your products.
7. Greater customer engagement
You interact more with customers when you launch a loyalty program. You have access to their personal information, so you can reach them wherever they are.
PassKit, for instance, supports a multichannel distribution system. It enables you to reach and engage with customers through
- SMS marketing
- Social media
- Permission-based marketing
- Location-based marketing
- Receipt marketing
- NFC payments
- In-app advertising
- In-store advertising
- Email marketing
- Company website
- POP marketing
- Retail marketing
Customer engagement goes through the roof when you interact with consumers on all brand touchpoints. It would be a mistake not to do that because customers can forget you after not hearing from you for a while.
8. Improved customer satisfaction
One of the critical benefits of loyalty programs is that they improve customer satisfaction. Your business shows appreciation for your customers with rewards. Every interaction with your brand brings them unique value. It increases their satisfaction and exposes them to an exceptional customer experience.
9. More effective targeted marketing
Small businesses need to know their customers to develop successful marketing strategies. Launching a loyalty program means that you will collect information about consumers. The program reveals everything you need to know about them, from how they shop to their favorite products.
You can use the information to send targeted marketing messages. If a consumer likes to shop online, you can create unique online offers just for them.
Now that you know what you get with a loyalty program, let’s see if you need to create a custom app.
Is it necessary to build a custom app for a rewards program?
A custom app requires much time, dedication, and input from IT and design teams. You would also need to spend an excessive budget to get the end product. Is that necessary?
No, it isn’t! Small businesses now favor digital loyalty program solutions like PassKit. When you sign up for PassKit, you get all the tools for building optimized loyalty programs. You don’t need any coding or design experience. Our software makes creating loyalty programs easy and quick.
Keep reading to discover why you set up a rewards program with PassKit.
6 reasons to set up a rewards program with PassKit
Building personalized loyalty programs is more accessible with PassKit. Our software comes with features that help you create and launch the program in no time. Here are the key reasons to start your 45-day free trial.
1. Increase customer retention
Improving user retention is a top priority for small businesses. We understand why. You want to nurture relationships with current customers and ensure they stay with you. That’s where PassKit steps in.
We provide loyalty card templates that adhere to Google Pay and Apple Wallet guidelines. Once created, digital cards can improve your customer retention strategy.
We use multichannel distribution to make your program available on numerous channels. PassKit then collects information from these channels to help you make changes and understand what your customers want.
You can monitor the program’s performance and see which distribution channel attracts customers the most or which mobile wallets they prefer using to optimize your marketing strategy.
2. Increase brand awareness and loyalty
Brand awareness is crucial because it ensures your target audience remembers your services and products. Nothing increases brand awareness and loyalty more than a custom program created with PassKit tailored to your consumer needs.
3. Reduce marketing costs
PassKit ensures your loyalty program integrates seamlessly into the platforms your customers currently use. You can promote the loyalty program in your app. You must pick where to include the “Add to Wallet” button in the app.
When customers click the button, it will take them to their preferred digital wallet. This way of promoting your loyalty program decreases marketing costs.
4. Encourage word-of-mouth referrals
A great customer experience prompts people to recommend your brand to others. If they find value in rewards programs for small business, they want others to take advantage. With PassKit, you can launch offers encouraging shoppers to refer friends and family to your business.
5. Personalize offers and rewards for customers
Knowing how customers interact with your business makes delivering personalized customer experience easier. PassKit monitors how they use your loyalty program. Is it online or in person? We will tell you that!
As a result, you can target consumers more precisely. Those who purchase on your website will get online offers, and vice versa.
6. Provide a connected customer experience
Consumers demand a connected customer experience. They don’t want to see a difference between online and offline interaction with your brand.
Using our app, you can launch a rewards program that bridges the gap between the offline and online worlds. Instead of carrying vouchers and physical cards, consumers get digital coupons and cards. They can use them while browsing online or visiting your nail salon, store, gym, or hotel.
Now that you know how PassKit boosts your rewards program, let’s share some success stories from our clients.
PassKit case studies: The success of our customers
PassKit provides a unique customer loyalty platform that helps businesses in different industries retain customers. Retailers, hotels, restaurants, insurance companies, and food and beverage companies are some industries we have experience with.
Our case studies below show how we have helped different businesses to improve their customer loyalty programs. With our help, they have increased customer retention, improved customer satisfaction, and boosted their bottom line.
Image source: Subway
Subway wanted to eliminate paper coupons because they were underperforming. The team chose PassKit to launch digital coupons that customers could use easily.
We helped Subway drive more traffic and increase brand awareness. The team was able to promote coupons via SMS, email, in-store posters, and newspapers.
Subway increased the peak hour by 300%, distributed 25,000 passes, and achieved a 12% increase in redemption.
Resorts World Manila
Image source: Pinterest
Resorts World Manila wanted to transform and digitalize its loyalty program. We helped it enhance the experience of its existing consumers and bring in new customers to the business.
The main goal was to make digital membership cards and eliminate paper cards. The company used our Pass Designer to create a personalized look for the cards. It then launched campaigns on Facebook, its website, and traditional media.
The members received free movie passes, which was an attractive offer. It generated 27,000 memberships in just 24 hours!
Pernod Ricard operates in the wine and spirits sector worldwide. Together with PassKit, the brand worked to increase customer engagement.
Our main goal was to compile user profiles and redemption data. That way, Pernod Ricard could make informed and effective marketing decisions. It used the data to segment customers and promoted its brand.
Pernod Ricard achieved a 7% increase in redemption rate, a 34% increase in redeemers who kept buying the products, and attracted 770 new users.
What to do next about your customer loyalty program?
It’s high time you create or improve your customer loyalty program. It is the most effective way to show consumers you care about them and appreciate their businesses. Luckily, technology has advanced, so you can build your program without the help of IT or design teams.
PassKit makes that happen. Our solution lets you design and launch a unique rewards program in just a few minutes. Without coding skills, you can develop a program that works on your consumers’ mobile wallets.