Customer loyalty programmes: do they matter for small businesses?

Most businesses are desperate to build customer loyalty; as a result, most consumers have a wallet full of big name loyalty cards.

Customer loyalty programmes

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The big supermarkets use membership management systems to crunch data and maintain competitive advantage. Major high street retailers such as Boots have points-based systems and use them to target the customers they know will spend the most with them, with the over 60s receiving a more generous reward rate.

Rewarding customers to build loyalty

Small businesses have by and large left this kind of scheme to the big boys; however, this appears to be changing. The same benefits that are reaped by big businesses are available to small- and medium-sized companies. Repeat customers who buy with you repeatedly can form a stable core for a business, as recently discussed by Entrepreneur, so reward them for their custom.

The reward scheme can be as simple as small handmade cards that you stamp each time they buy. These loyalty schemes tend to work best where the purchase is something regular and not too large – probably one of the largest businesses running this kind of scheme is Waterstones, which gives a stamp for every £10 spent in store.

Membership schemes – not just for the big boys

The simple stamped card is not collecting any business intelligence on customers and their individual preferences, of course, whereas large businesses see this as a vital part of running a loyalty scheme. Marks and Spencer is the latest large firm to seek to both build loyalty and find out much more about its customers, with its Sparks card launched this year.

Small businesses are often put off a membership-type loyalty scheme such as those run by large stores due to the complications of collecting, storing and analysing the data, and the further legal ramifications of holding customers’ names and addresses. What many do not realise is that membership management software, such as that available from http://www.ofec.co.uk/membership-management-system-portfolio.aspx, can be aimed at small- and medium-sized businesses and can do the work for them, enabling them to realise the benefits without dealing with the technicalities.

By using the information provided by such schemes, independent retailers can personalise what they offer their customers in just the same way as the big stores.

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