One big lesson that has come out of the pandemic is the value of customer loyalty. Loyal customers not only spend more, but they also serve as business ambassadors, attracting new customers to their favorite small businesses. 

An often-cited statistic for spending, which originated with Bain & Company in 1991, is that loyal customers spend 67% more than new ones. Not only that, but 56% of customers will spend more at a business they are loyal to, even when there are cheaper priced options elsewhere (that they likely know about), Yotpo reported. That percentage is up significantly from 2019, when only 34.5% were willing to spend more.

Loyal customers are also more profitable customers, according to a Harvard Business Review report that found increasing customer retention rates by 5% increases profits anywhere from 25% to 95%. That statistic is in line with the Pareto principle, which says that 20% of your customers are responsible for 80% of your profits. 

In the simplest terms, holding on to customers you already have will help you build your customer base faster, increase sales, and increase profits faster than trying to attract new customers.

So how can you foster loyalty? Creating a program that rewards shoppers is one easy way. Bond Brand Loyalty found that 80% of buyers say loyalty programs both make them more likely to keep buying from the company or brand, and 68% buy more to maximize their loyalty benefits.

Loyalty programs can drive sales and, fortunately, starting one doesn’t have to be complicated.

Encouraging Customer Behavior

The first step in creating a loyalty program is deciding what you want to encourage customers to do. For example:

• Do you want them to come in more frequently? 
• Do you want them to spend more on each visit? 
• Do you want their help in attracting more customers? 
• Do you want them to help promote certain products or brands?

Once you’re clear on what you want them to do, you can start to think about what you can offer that will entice them to take the action you want.

Choosing a Reward

There are probably hundreds of ways you could reward customers, but it’s important to think about what they want.

You could offer a gift certificate after customers spend a certain amount. Kohl’s does this with its Kohl’s Cash, which customers earn after spending in $50 increments. However, shoppers have to come back during the redemption period, which is typically a week or so after the cash is earned, rather than being able to spend it immediately. This boosts spending and return visits.

You could offer a discount on-the-spot for checking in on social media. Or a special prize for sharing a photo of a product purchase. This may be useful if your goal is to increase social media engagement or followers.

Many small service businesses offer cards cards that track each visit and reward the customer with a free product or a discount once the card has been filled in. That encourages repeat visits, without having to track dollar amounts spent.

You could offer free products for purchases made during a certain timeframe, like Clinique does with its bonuses. A pioneer of the free sample gift-with-purchase, cosmetic brand Clinique offers a special pack of several mini products when customers spend over a certain amount. Not only does this entice customers to spend the minimum amount to qualify, but they receive samples of other Clinique products to try that they may opt to buy next time.

Some loyalty programs offer regular benefits to regular customers, such as a percentage rebate on each purchase.

Others allow their loyalty program participants early access to sales or events, like American Express does when it offers cardholders early access to concerts and live event ticket sales.

Be sure to keep in mind that the reward needs to be something customers want in order to have any impact on your bottom line. Offering a 1% discount after spending $100, for example, is unlikely to make a difference (or the tiny amount may actually irritate customers).

Picking a Platform

When it comes to managing your rewards program, it’s best to keep it as simple as possible. Don’t invest in expensive tracking programs until you’re sure it will be worth it.

A physical punch card is a simple option that requires no tracking on your part. Design, print, and copy it yourself or use a service like Vistaprint to create something.

A software program tied to your cash register is an option for tracking amounts spent, or specific products purchased.

Sign up with an easy-to-use text-based loyalty program, such as Social Spiral, which has customers enter their cell phone number to participate. There’s no app to download and they can check their rewards via text. 

Or if you want an app, try CandyBar, which is a digital loyalty program that helps businesses track customer purchases and reward them.

With both software programs, businesses can also communicate with loyalty program members, sending them special alerts about sales or limited time offers.

Since retail loyalty program members generate between 12% and 18% more revenue for retailers than customers who aren’t program members, according to Accenture, investing a little time and money to create your own could result in a big boost to your sales.

Many entrepreneurs are disappointed to find that banks generally won’t lend money to startups and early-stage ventures unless the business owner already has funds available, collateral, a solid business plan, and a solid credit rating. When you’re just starting out, there aren’t many women business owners who can check all the boxes that banks frequently require.

For many women, that can mean the end of trying to start or grow a business.

However, there are several options—some appropriate for startups and others for existing businesses—that don’t involve banks or credit unions and that may be able to provide business financing.

Startups

True startups are in the first year of operation, or are in the process of opening their doors. That means the company doesn’t have much of a track record of sales or a solid client base yet, in most cases, at least. But there are a couple of potential sources of capital.

Grants. In addition to the Amber Grant, there are other companies, government agencies, and nonprofit foundations that have grants that can be used to start and run a business. A few are specifically focused on helping small businesses recover from the impact of the pandemic.

Microloans. The US Small Business Administration has a program that guarantees loans of up to $50,000 to companies (meaning the bank lends the money but the SBA assumes the risk of repayment. The SBA backing makes banks more likely to lend.). These smaller loans are termed microloans and are typically easier to qualify for than traditional business loans.

Existing Businesses

If you have a business history, meaning you’ve been up-and-running for a while, you have a few more options for securing funding. These can include:

Factoring. If you have unpaid invoices that are squeezing your cash flow, factoring, or invoice financing, is one option. Granted, it’s expensive, because you essentially sell your unpaid invoices to a lender, which gives you a percentage of what you’re owed in cash today. As clients pay, the lender gets to keep most or all of it. It’s a solid option if you need money now, however.

Merchant cash advance.

If you accept credit cards from customers, who pay through a merchant services service you use, you may be able to get a cash advance based on your customers’ buying habits. For example, if you borrow $10,000, a portion of that debt is paid off daily based on your credit card sales. The amount you pay back each day is based on a percentage of your daily sales, so when things are slow your merchant provider takes a small percentage, and on busy days, it takes a larger chunk. Businesses with customers that typically pay via credit card, like restaurants, may find this is a convenient solution.

PayPal Working Capital loan.

Businesses that rely on PayPal for online payment processing may qualify for a working capital loan, which PayPal makes based on the amount of business you do on its platform. Like a merchant cash advance, PayPal makes loans based on the amount of business that is processed on the platform and structures repayment with that in mind as well.

Line of credit. Much like a credit card, which allows you to charge up to a certain amount and then pay it back over time, a line of credit provides the same flexibility. You have a maximum amount you need to stay below, but you can pay for things you need using your line of credit, paying it down as you’re paid.

Private investors. Also known as “hard money lenders,” these investors are willing to provide loans that are backed by hard assets, such as real estate, equipment, vehicles, etc. The expected payback is quick, however, and typically ranges from 18 to 24 months. This should not be a long-term strategy simply because it’s very expensive.

Leases. When you don’t have the cash or credit to purchase something you need outright, consider applying for a lease, which will allow you to effectively rent it. However, rather than having to come up with a large lump sum, you’ll pay a fixed monthly fee in order to use it. When the lease is up, you can renew for a set period of time, opt to lease something else, or put the money down and buy it outright.

It can be very discouraging to be told “no” by potential lenders or investors, but if you can find out what’s holding them back from giving you what you need, you can put together a game plan to improve your odds next time. For example, it it’s your credit score that’s knocking you out of qualifying, spend a few months getting that score up. Or if it’s your business revenue, put together a plan to dramatically increase your sales over the next 90 days, and then try again.

Outside financing can be a turbo boost to business growth, but it is certainly very possible to continue to grow your business on your own, with the resources you have now. Don’t get discouraged. Just keep trying.