August 13, 2015 - Posted in Promotion & Marketing
5 Ways to Reward and Retain Customers
Customer retention and customer churn are something we hear about often in business, but what do these terms really mean for your bottom line?
First, let’s start with some definitions. Your customer retention rate can be defined as the percentage of customers that stay with your brand on a long-term basis while your churn rate is defined as the percentage of your customers who leave your brand for another.
Attracting new customers is very important for any business, but according to a 2008 study, acquiring a new customer can cost 5 times more than retaining an existing customer.
Increasing customer retention is a great way to offset customer churn, so here are five ways that you can reward your customers to promote brand loyalty and increase your retention rates:
Use a Points System
Points systems, such as punch cards that allow a customer to earn a free product after purchasing a certain number of the same product, are perhaps the most tried and true version of customer loyalty rewards programs.
Loyalty points systems are particularly effective for low dollar, high volume products that customers purchase on a regular basis, such as free coffee at a cafe for every 10 coffee purchases or a free pizza for every certain number of points earned at a pizza delivery restaurant.
When the rewards are easily attainable over a short period of time, you are able to build excitement with your customers as they look eagerly toward their upcoming freebie.
Offer Free Value-Add Services
Sometimes the best way to differentiate yourself from your competitors and to instill loyalty in your customer base is to offer services that you know will appeal to your customers’ needs, rather than offering them a less personal monetary discount.
Think about what else you can offer your client to supplement their purchase from you and include that service in your pricing model – at or below cost – to add value to your product over someone else’s. A good example of this is a car dealership offering free car detailing for services or repairs over a certain dollar amount.
Providing extra services that your customers may not have been expecting can create memorable experiences that stick with them.
Establish Partnerships to Expand Your Offering
Another great customer loyalty tactic is to partner with related businesses to present coalition offers to your customers and theirs, by offering a discount on their product or service for purchasing yours (and vice versa).
Again the key here is to think about the needs of your customers that may be related to the needs you solve for them with your own product. Some examples of this could include a beach resort partnering with a local boat tour group or a swim shop to offer discounts to these businesses for any customers who purchase beach passes from the resort.
Because these types of partnerships can go two ways, the swim shop can also offer discounted beach passes to its customers, opening up a new customer acquisition channel as well!
Create Exclusive Beta Testing Groups
One of the best ways to make sure your new product or service features are going to resonate well with your customer base is to obtain feedback through pre-release beta testing and customer surveys. Conveniently enough, inviting trusted customers to test drive new products before they’re released is also a great way to establish customer loyalty.
Customers who get to try new products and services before the rest of the general public tend to feel special and also develop a certain degree of ownership over the products that they test and provide feedback on (and are therefore emotionally invested in). These customers often become brand evangelists and can attract new customers for your brand through word of mouth referrals – all while providing you with valuable R&D feedback to improve your business!
Establish Tier-Based Discounts
While similar to points-based rewards systems, tier-based discount programs can be more effective when attempting to appeal to customers who are making higher commitment, higher price point purchases. These types of purchases are often made less frequently, and requiring the customer to keep track of how many points they’ve earned over a long period of time can result in lost interest and frustration.
Instead, a tier-based discount system allows customers to receive instant rewards by immediately reducing the dollar amount of purchases before they are made when certain spending targets are reached.
At SimpleTix, we understand the value of customer retention – for example, just a 5% increase in customer retention can result in a 25-100% increase in profits! This is why we offer our customers the only tier-based discount feature available on any ticketing software platform, to ensure that our customers are able to do more with their ticketing software than simply sell tickets.
With our exclusive customer loyalty feature, our customers are able to establish discount tiers for their customers when buying tickets through the SimpleTix portal – helping them achieve hassle-free customer loyalty.
Which customer loyalty programs have been the most rewarding for you? Let us know know in the comments!
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