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A Guide To Loyalty Schemes And Why They’re So Important

Updated: May 18, 2022

So, you’re thinking about introducing a loyalty scheme to your business? Or you’re simply exploring your options and wanting to find out more? You’re in the right place! Here, we introduce the concept of loyalty schemes and why we believe they are so valuable for growing your business.

What is a loyalty scheme?

Loyalty schemes - otherwise known as rewards programmes - are a method used by businesses to establish a loyal customer base. They offer customer rewards in exchange for frequent purchases, which vary from business to business. Sectors can be competitive and oversaturated by similar products so establishing a loyal customer base can significantly help in the assurance of continued customer retention. Introducing a loyalty scheme into your business will therefore make your customers increasingly likely to choose your business over that of a competitor.

Cutting costs

This oversaturation of products in particular sectors often leads to panic cost-cutting in an attempt to compete. However, this is potentially damaging to your long-term revenue, simply by introducing a loyalty scheme into your business, you can evade these issues. Despite their success, businesses can damage their reputation by either implementing older loyalty schemes that are hard to keep track of or simply not implementing one at all. In doing so, they fail to reach their desired customer base.

New vs old customers

Many businesses also spend significant time and money trying to attract new customers while neglecting the ones they already have. This is not to say that new customers are not important - they are! But building an established relationship with current customers can have a positive impact on the longevity of your business while also building a sense of community around your brand. Loyalty schemes are essential in creating this positive brand image while also ensuring excitement around the prospect of returning to your site.

What are the numbers to prove it?

According to research conducted by Nicholas Hoffman in 2013, approximately 20% of customers are responsible for 80% of a company’s revenue, highlighting the need to capitalise on pre-existing customers. Furthermore, recent studies show that approximately 83% of customers said they would be more likely to return to a business that offers some kind of loyalty scheme or rewards programme. Further data shows that customers are likely to spend 67% more when part of a customer loyalty programme.

ShopHub and Brand Identity

While increased sales are an obvious end goal, establishing a good customer experience is also a key result after establishing a loyalty scheme. Earning rewards creates a sense of anticipation for the customer, making the prospect of a repeat purchase more compelling. This is done in many different ways, and there are a number of loyalty schemes currently offering various methods. ShopHub, however, stands out from the crowd through its personalisation features and stamp collection. Stamps are arguably a much more appealing method of tracking how many purchases a customer makes over time in comparison to a more numerical approach. ShopHub also allows businesses to establish their own brand identity, with customisable options to suit the aesthetics of your business.

Spotlight on successful business using ShopHub: Evie and Bear

If the facts and figures haven’t convinced you yet, we’ve sat down with the owner of the successful business Evie and Bear to find out about her business and why she thinks joining the ShopHub loyalty scheme was an essential move.

Owner Abbie Underwood first established Evie and Bear when her daughter was six months old and specialises in creating handmade children’s clothing and headbands for newborns up to 4-5-year-olds.

What first made you start the business and when was that?

“I started the business in January 2020 just after I had my daughter. I didn’t want to put her into a nursery so young and wanted to find a way to not have to rely on other people for money... I just had hobbies really doing things like hand-sewing until my mum bought me a sewing machine for Christmas. I didn’t even have a clue how to use it at first but I just taught myself and within one month I’d opened my business page! It was really small at first as I didn’t have an official selling platform yet.”

Do you think starting your online business only a couple of months before we went into a national lockdown had any impact on your sales and revenue? Was it difficult to gather and maintain a customer base?

“I don’t think it did actually affect my sales. A lot of other small businesses have said that it did but for me, they definitely weren’t badly affected. People were obviously at home a lot more and, especially since my marketing is all through Instagram, I think people were accessing it more easily. If anything I think it probably helped my page to grow. I definitely didn’t notice a drop in any of my sales at least.”

What kind of aesthetic do you want customers to associate with your brand?

“I really try to make sure my photos are all done with really good lighting. I think good lighting is especially important for showing the customers that my products are really well made and of good quality. It can be really challenging to take high-quality photos; a lot harder than you would think! Editing in particular can take a really long time. But just making sure everything looks bright and airy can make such a significant difference as that is the best way to show the high quality of my products. Everything is completely handmade in comparison to the more typically high-street products so I need to make sure people recognise the quality of my products and their longevity in comparison through my business page. Then hopefully they’ll feel more encouraged and informed to make a purchase!”

What made you decide to link your business with ShopHub?

“I actually do already have quite a significant loyal customer base already as I’ve just created the kind of business where people feel happy to come back and make further purchases with me. I was also already introducing some incentives for these customers. For example, if I had a customer who was making multiple purchases with me over time I’d send them some free things anyway as that sort of thing is really important to me. So I could see that these sorts of incentives were really valued and appreciated by my customers. So it became clear to me that establishing myself with ShopHub would be a more official and established way for my customers to collect rewards for their continued custom with me.”

Why do you think establishing a loyal customer base is essential for businesses such as Evie and Bear?

“People are definitely right in saying that it actually costs more to try and gain a new customer than it does to maintain a returning customer. I think one of my returning customers has made around 15 purchases with me which is really crazy to me. So it’s definitely a lot harder to try and convince somebody completely new that your brand is the one for them against all of your competitors and to buy from you, rather than your current ones who already trust both you and your product to come back again. So it’s just a lot easier, cheaper, and more valuable for the relationship between yourself and the customer.”

To conclude, loyalty schemes are an essential means of establishing a loyal customer base for small-medium size businesses. These schemes help to create a sense of positivity and excitement about your brand and in turn encourage customers to return. If you’re wanting to try this out for yourself, simply download the ShopHub app!

Looking for something else? Check out more content from ShopHub:


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