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Loyalty Programs Can Grow a Micro Market’s Revenue and Customer Base

Loyalty Programs Can Grow a Micro Market’s Revenue and Customer BasePhoto credit information: 181906285 | 204474 | Dreamstime

Want to get customers to visit your micro market more often, spend more money when they’re there and feel good about making more purchases? You can achieve all three goals with a loyalty program.

Loyalty programs are the best way for micro market operators to connect with customers. Research supports the use of these programs as almost sure bets to improve sales. According to the Harvard Business Review, companies with strong customer loyalty programs increase revenues 2.5 times faster, compared with their competitors, and generate higher returns. HBR also found that acquiring a new customer costs five to 25 times more than retaining an existing one. Furthermore, a 5% lift in customer retention increases profits by 25% to 95%.

Whether they’re managed on punch cards, mail-in rebate forms or mobile/cloud apps that make tracking purchasing data seamless, rewards and loyalty programs are powerful tools for improving consumer engagement. Nearly two-thirds (64%) of companies surveyed by Invesp, an e-commerce conversion rate optimization software provider, say loyalty programs are the best way to connect with customers.

Loyalty programs have a positive emotional impact on customers, and earning loyalty should be a high priority for micro market operators. Here are four key benefits of loyalty programs you must keep in mind.

1. Loyalty programs will lift sales and customers’ spirits

Given enough time to gain traction, loyalty programs will almost always positively affect sales and growth. Such programs improve the retention levels of customers who like that the programs recognize their purchasing power, so they remain loyal. When rewards match desires (usually free stuff!), operators gain more business.

2. Loyalty programs are cost-effective

Acquiring new customers is as important as keeping existing ones. As a general rule, however, seeking new customers costs much more than retaining existing ones. This makes loyalty programs financially savvy. And the relatively small expenses incurred (mainly free and discounted products) to run a loyalty program will be far offset by additional sales generated. Once you have a rewards program set up, it becomes self-sustaining.

3. Loyalty programs boost reputation

The main function of a loyalty program is twofold: to ensure that current clients feel as if they are valued by your operation, and to incentivize hard-to-retain new ones to stick around after their first purchases. At its core, a loyalty program expands customer appreciation, and the more a customer feels that your business acknowledges them, the more likely they are to get the message out. Word-of-mouth advertising, after all, is one of the cheapest and most effective approaches to growing a business.

4. Loyalty programs cement location relationships

Every operator of vending and micro markets understands the need to increase account retention. There’s no worse feeling than losing an account to a competitor and realizing what you could have done better to keep it. A well-established loyalty program is a great way to keep your micro markets relevant with location customers and management. It would be difficult for location management to replace an operator when they consider all the points and rewardable transaction histories held on employees’ accounts.

Take full advantage of micro market loyalty tools

Today’s micro market technology suppliers offer operators practical marketing tools to earn new customers, retain existing ones and grow sales. Since micro markets are managed by operators though web-based management systems, and more market applications are gaining registered mobile users, loyalty programs are a natural fit.

An early developer of loyalty promotions for micro markets, Avanti Markets enables operators to reward and thank loyal customers for purchasing products through its Avanti Advantage program. Coming this spring, Avanti Advantage will allow customers of participating operating markets to earn loyalty points based on market purchases when using their Avanti Market Card or Avanti app.

Three Square Market gives operators the ability to not only customize products that can be part of its loyalty program, but also the points value associated with those purchases. Loyalty program customers can then pay with points once enough are accrued. Cooperative giant Unified Strategies Group has used Three Square’s integrated platform to enable its operator members to apply custom rewards programs to their markets. Rewards are redeemed by offering free or discounted items.

Effective micro market loyalty programs must allow for customization. Self-checkout solutions provider 365 Retail Markets, for example, enables operators to effortlessly set up a program and deploy it across some or all of their markets. Operators can filter a rewards program by location type, device, discount amounts and duration, among other parameters. The customer-facing points manager is found in the 365Pay app. An operator’s market customer accumulates points with each purchase to redeem for cash back on their account.

Rather than a points tally, Parlevel Systems’ loyalty strategy uses a percentage-based incentive, allowing market customers to earn benefits when they reload their wallets. An operator could provide a 10% (or $2) incentive when a customer reloads their account with $20, for example. Parlevel market operators can also commemorate loyalty milestones with gift cards ranging from $5 to $100. Gift cards are also great promotions for human resources personnel, who could reward their company’s Employee of the Month with a $50 micro market gift card, for instance.

By using loyalty promotions to encourage larger purchases, operators can reduce processing fees—whether it’s a $12 or $1.50 purchase, the transaction fee is usually the same, says Chris Blomquist, Parlevel’s director of marketing. This savings is evident with Parlevel’s wallet reloads, which also have the benefit of paying the operator in advance.

Mobile-only (“kioskless”) markets offer other creative options for rewarding loyalty. Instead of using points or stars, Vagabond’s vīv solution can deliver rewards using its automated dynamic pricing technology. This feature adjusts pricing for all types of applications. When applied to a loyalty program, vīv operators can either reward an account or specific consumer for reaching a milestone by scheduling price reductions or refunding transactions.

These are just a few examples of loyalty programs available to operators. Most micro market platforms allow you to build and implement a program that’s right for your micro market business and customers, so make sure you’re taking full advantage of them.

Once you have your loyalty programs up and running, make sure your customers know about them. Our recent article on signage offers some great ideas for engaging with market customers in memorable ways.

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