Acquiring a ton of new customers is a great thing for a business, but keeping those customers is unequivocally better. Most experts agree that the cost of acquiring a new customer is 4 to 10 times more than retaining an existing customer. This stands to reason: someone who is completely unfamiliar with your product or service is going to take much more convincing than someone who has already used and loved it.
Loyalty programs are the obvious first choice for promoting customer retention. These programs have come a long way from standard “buy 4, get 1 free” punch cards. Technologies like mobile apps allow businesses to create loyalty programs that are more engaging and efficient for much the same cost.
The gold-standard example of this is the My Starbucks Rewards program. Members can pay using either a Rewards card or the official Starbucks app to earn “Stars”, which count toward free drinks and food. It’s the same concept as a punch card, but adapted for the modern world. Upon sign-up, members also receive special offers via email and early access to new products. It’s a win-win for both Starbucks and its customers as Starbucks builds its customer database and customers see instant savings.
Loyalty programs are often free for customers, but this needn’t always be the case. You just have to offer something that is worth the charge. Take the ever-popular Amazon Prime, for example. Although a year subscription costs $99, members receive, among other things, free two-day shipping and access to a Netflix-like library of streamable movies and TV. With these features alone, A Prime membership can easily pay for itself, and then some. It’s why some 50 million Amazon customers worldwide are estimated to have a Prime account.
Digital receipts are not a loyalty program in the traditional sense, but they can provide many of the customer retention benefits that loyalty programs offer. Targeted ads and offers to customers who just made a purchase give incentive to return and keep the company on the customers’ minds. Digital receipts can also incentivize return customers by providing ease of use, such as with flexReceipts customer portal for organizing receipts and tracking returns.
While there are many different approaches to customer loyalty, one thing is certain: keeping customers coming back for more is one of the single most important keys to retail success.