Rewards, Incentives and the Key to Retaining Customers

By J.B. Maverick

2 min read

Every small business feels the cost burden of marketing strategies to draw in customers. Your small business needs to make the most of this investment by creating brand and company loyalty among customers to keep them coming back. On average, it costs six to seven times more to acquire new customers than to retain current customers. It makes good business sense to incentivize customers to continue doing business with your company. Your small business can employ these key tactics to maximize customer retention.

Coupons

To show customers you appreciate their business and encourage them to continue patronizing your company, establish a system of rewards. One of the most common and effective ways to do this is by offering coupons. Hair salons commonly offer discount coupons that can be used on a return visit, for example.

A good strategy to consider is offering coupons for different levels of customer business. The lowest level of coupon can be available to any customer, helping to draw in new customers. Offer higher-value coupons to returning customers in relation to how often or how long they have done business with you. For example, a basic coupon might give a 5% discount on one item, while a customer who has been with you for years could receive 15% off an entire purchase or order. Increase the benefits of the coupon for increased customer loyalty.

Rewards Cards

Rewards cards can be used in much the same way as coupons. Consider making rewards cards slightly more difficult or costly to obtain, either through length of time as a customer or through charging a fee for the card. The exclusivity of possessing such a card makes it attractive, but your company must be ready to offer customers using it substantial rewards. These can come in various forms, including dollars off the price of one item or of an order, getting an extra item free, or getting goods or services for free with or without a purchase.

You might also consider establishing some type of reward points program in conjunction with the card. Many small businesses allow customers to accrue reward points for each purchase they make or on the purchase of certain goods or services. Giving the customer a choice in how these points can be used is important in making a rewards points program successful. Consider allowing these points to be used in a number of ways. For example, each point could carry a dollar amount value, or a collection of points could be used to obtain a percentage off the price of a good or service.

The Key to Retention

The key to retention is offering customers clear, added benefits for staying loyal to your brand and your company. To cultivate loyalty, customers need to trust your brand and also to feel that they are important to you and your business. Rewarding them for patronizing your company is the most effective way to accomplish that goal.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

Related Articles

Guidelines for Claiming Advertising Expenses on a Canadian Business Tax Return

Advertising is an essential part of starting and maintaining a profitable small…

Read more

Hospitality Industry: Managing Last-Minute Cancellations

In the travel and hospitality industry, last-minute cancellations are inevitable. A cancellation…

Read more

Attract the Best Seasonal and Temporary Employees for Your Construction Business

Construction is a seasonal industry in which an influx of hiring occurs…

Read more