Business Advice meets the founder of a digital customer reward scheme promising to instil community loyalty to local high street retailers.
Loyalty cards are nothing new on Britain’s high streets. But, for smaller retailers competing against the levels of customer retention enjoyed by larger competitors, finding ways to reward regular customers within tight margins is increasingly difficult.
Nonetheless, there are two strands of benefits to a customer reward scheme – incentivising new customers to make repeat purchases after their first visit, and earning the loyalty of regulars by giving them something in return.
The footfall benefits of a loyal customer base are also well documented. Research from the Chartered Institute of Marketing suggested a five per cent lift in customer retention could be worth as much as an 85 per cent increase in sales, with brand loyalists spending over three-quarters as much as a new customer.
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Meanwhile, Forbes has previously claimed it is seven times less expensive to keep a customer than to acquire a new one.
Unfortuntely, bespoke app development is expensive. So too is replicating the Nectar model, and can customers really be relied on to keep hold of loose, stamped cards? For smaller stores, a worthwhile scheme means responding to the modern habits of consumers.
To help Britain’s small businesses generate the levels of retention enjoyed by high street giants like Nando’s and Café Nero, one mobile application is offering founders a simple way to create their own tailored customer reward scheme.
Marcus Naidoo, founder of the Shop Local Club Card, sat down with Business Advice to explain how his own venture is supporting local retailers in communities across the UK.
“Our aim is to the bring big-brand loyalty and marketing tools from companies like Tesco and Starbucks to local independents at an affordable price,” Naidoo explained. Adding further detail to his mission statement, he said arming small firms with the tools needed to challenge their corporate neighbours was fundamental.
Simply put, the app utilises mobile and cloud technologies to act as a digital loyalty card solution for independent traders.
Outlining how his product works, Naidoo gave an overview of two popular schemes used by local business owners.
“Typically, our shops are using both stamp cards – ‘buy five coffees get one free’ – as well as points collection, which will be turned into vouchers at varying rates from two per cent cashback to five per cent.”
Naidoo was keen to point out how the app’s versatility created opportunities for all kinds of small businesses. “The program is very flexible and works in butchers, fashion retailers, stationery shops. It will even work for dog walkers,” he added.
“Each business is only limited by their imagination and can give all sorts of rewards, from a high-five to money-off vouchers. And, of course, free coffees.”
For the more traditional consumer less acquainted with mobile apps, the physical membership card works in the same way. Cards are scanned at the counter, and retailers can update the customer with information on their account and progress.
From a consumer perspective, convenience and ease of use are vital ingredients in encouraging participation and boosting sales. Naidoo elaborated on the “sign up once and save everywhere” offering that make the app and card accessible and user-friendly.
“Users can track all their stamp cards, points and vouchers quickly and easily,” he said. “It also acts as a handy directory and map for all participating nearby indie businesses.”
A testimonial from a local business demonstrated how Shop Local Club Card’s has been able to universalise loyalty schemes and empower stores no less threatened by the presence of larger chains as a small café is.
“We have had our local butcher say: ‘I’ve been thinking of a scheme like this, that will work in a local business community, for about ten years’,” Naidoo recalled.
Participating merchants are also offered advertising space on the app and in local media, but Naidoo explained some of the more subtle benefits that the digital loyalty card can deliver a local business owner.
“Not only will you see greater retention of customers, potential higher spend and most likely increased margins, but you will also have an enhanced local business community profile. In turn, this can only act to increase awareness of your offerings local and impact footfall, which we already appreciate will impact bottom line performance.”
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