Loyalty programs improve retention rates for SMBs
November 26, 2013

For small and medium-sized enterprises that are interested maximizing year-round revenue, investing in gift card programs and loyalty programs may be the most reliable business strategy.

Nielsen recently released the results of a global survey that measured consumer sentiment regarding the loyalty programs available at the stores they visit on a regular basis. The report found such initiatives are currently offered at 61 percent of establishments throughout North America.

If you build it, they will come
The success of rewards programs at small and medium-sized businesses depends on a variety of factors. For example, store owners must make sure the incentives for loyalty match the actual interests and preferences of shoppers. Similarly, stores must be able to easily process transactions involving rewards points in a way that doesn't disrupt or disorganize payment information from other channels. However, the most important indicator of success is the mere presence of a loyalty program in the first place. According to the results of the Nielsen survey, both the use and prevalence of these customer retention tools are closely connected. In fact, 76 percent of consumers in North America claimed they will continue shopping at businesses that offer quality rewards in exchange for continued visits. In other words, the best way to ensure a loyalty initiative translates to meaningful returns on investment is to simply put the effort into offering one.

Benefits for retailers of all sizes
In the past, dynamic loyalty programs were limited to the large, national retail chains that were able to afford the infrastructure needed to organize customer data. Small businesses, on the other hand, often relied exclusively on punch cards that rarely integrated seamlessly with electronic payment systems. Recent advancements in technology, however, have made it much simpler for smaller enterprises to update their rewards initiatives to reflect the current state of the retail industry.

"Going forward, we believe the proportion of business generated from both loyalty programs and promotions will rise significantly, as SMBs increasingly tailor their offerings to frequent customers and specific customer segments," Steve Marshall, director of research for BIA/Kelsey, told the online publication Small Business Computing.

By investing in an advanced loyalty program, store owners can outperform their competitors and retain customers for longer periods of time. They can also gain further insights into buyer behaviors and preferences.

Nexus: G-WEBCD6