Many trade merchants believe attracting new customers to be the priority when it comes to increasing profit, but the high cost of bringing in new customers is incomparable to that of retaining existing ones. Increasing your customer retention can help to boost profits, which is why so many firms place a high emphasis on building customer loyalty. As an effective way of increasing customer retention, loyalty schemes can be implemented with the help of point of sale data – but what are the benefits, and what makes a scheme more effective?
The benefits of loyalty schemes
As well as encouraging your customers to return, a loyalty scheme enables you to improve your customer satisfaction. The more your customers return, the greater the opportunity you have to get to know them. In turn, this will enable you to meet their needs more efficiently and successfully, making it more likely for them to remain loyal customers. With intelligent retail software, you can easily identify your loyal customers and keep a record of their purchases, which will allow you to target your promotions effectively.
Interestingly, loyalty schemes can also help to highlight ‘bad’ customers who cost you money, rather than helping you profit. These are the customers who may only buy during the sales, who may be late with their payments or who may make a large number of purchase returns, often meaning they will generate very little profit. With access to point of sale information, you’ll be able to implement a loyalty scheme that rewards ‘good’ customers who remain within their agreed credit limits and keep their accounts in balance. By being able to identify your most profitable customers, you’ll have the information in front of you to identify when agreeing on a particular pricing term may be of greater advantage to you.
Naturally, being able to build a stronger relationship with your customers can encourage the creation of brand advocates – customers who are so pleased with your services that they tell their colleagues and peers, promoting your business for free. A personal recommendation is often far more convincing that a promotional email, and so access to the right electronic sale information can help to generate new business.
How to choose the right loyalty scheme
There are many loyalty schemes available to try, and it’s up to you to decide whether a formal arrangement would work better for you than simply being able to understand each customer individually. Popular formal schemes include loyalty cards, which are used to collect stamps or points, to simply ‘Recommend a friend’ arrangements. Importantly, the first step should be to identify your incentives for a scheme: are you looking for repeat business, seeking to encourage your customers to spend more or do you simply wish to find a means of giving more accurate quotations. Rewards can vary from discounts to extra goods or even prizes, and loyalty schemes could even help you to find a more profitable means of shifting any dead stock you may have.
Whichever scheme you choose, it is important that you make your customers work for it! Reward your best customers for their loyalty, and be clear about who doesn’t qualify for the same discounts – and what they can do to improve their chances of accessing such schemes. With Integrity’s point of sale software, you’ll be able to simply identify when a particular customer is due a reward – so even if they have forgotten, you can offer them a nice surprise.
Loyalty schemes can provide you with valuable data that can be used elsewhere within the company, but are generally used to help your company grow. If you’d like to find out how Integrity Trader software can support your company and loyalty schemes, contact the team today.
Trader is an easy to use electronic point of sale system designed for the unique requirements of building, plumbing and timber merchants, hardware and DIY stores in the UK and Ireland.
Our team are ready to help with any queries or arrange a demo for you.