Capturing the attention of first-time buyers drives many marketing campaigns forward, but repeat customers represent greater value for loyalty branding. It costs six to seven times as much money to land a new customer, as opposed to simply retaining those already frequenting your business. A loyal customer spends more money, recommends your brand to others, and generates a lifetime of return.
Some businesses choose to build point-based loyalty programs, in an effort to encourage repeat spending, but research suggests most of these programs don’t boost revenue. Instead, customers are more apt to frequent businesses that create a great buying experience.
Understanding Buyer Motivations
As an entrepreneur, you likely already understand the basic appeal of the products or services you offer. Beyond the wants or needs of your buyer, however, what is motivating how he or she spends his money? Of course, rewards and discounts can have some impact on a business’ success, but many times a customer is seeking an overall enjoyable experience. For example, Zagat discovered in a survey of restaurant diners that 51% of all complaints revolve around noise and bad service—not food quality or prices! Customers associate your brand with the experience you provide.
Don’t Undervalue Your Product
Loyalty programs are often used by businesses that struggle to set themselves apart from the competition. According to research cited in the Harvard Business Review, many businesses ultimately lose money because a points-based loyalty program trains customers not to buy without a discount. You are effectively telling your buyer not to pay the sticker price because it’s not worth that amount.
How to Improve Customer Experience
Poor service is one of the largest factors that pushes buyers to seek out competitors. Train your staff to be courteous, friendly, and sincere. If you’ve ever visited a luxury hotel, you may remember the customer service more than the room itself. At a certain point, a bed is just a bed, after all. Customer service is what allows a business to set itself apart.
Other factors that influence a customer’s perception of your business include your staff’s flexibility. If you run a restaurant, do you allow customers to make substitutions, for example? Modern buyers expect variety, choice, and the freedom to change their mind.
There are plenty of powerful tools you can utilize to encourage repeat visits from customers, but a loyalty program doesn’t need to be one of them. Instead, focus on making your business the best in its class. Diners don’t visit a Michelin-starred restaurant for the credit card points they’ll receive—they’re seeking an unforgettable experience. Apply the same principle in your business and watch your bottom line grow, all without using coupons and discount cards as a crutch for your marketing team.