Local business owners are busy people. It’s challenging to build an effective customer engagement strategy when you’re busy managing staff, keeping track of inventory and supplies, and ensuring your product or service is competitive. But — your business depends on it.
A focus on customer loyalty is essential to a small business’s survival. 63% of small business owners think that new customer acquisition is the most important marketing goal, but 80% of revenue comes from loyal customers.
That’s why the company I work for, Belly, exists; to help small business owners retain more customers. We recently partnered with Main Street Hub, to produce an educational webinar about this very topic — how to build a full blown customer engagement strategy for your local business. Much of the content in this post we cover in the webinar, so if you’re interested in listening to it in its entirety, scroll to the bottom!
We’ll cover the following lessons:
- Why you should focus on both customer acquisition and retention
- What platforms matter most when marketing yourself digitally
- How to build loyalty with your customers in a few simple tips
- How to use right place, right time messaging to increase engagement
- How to prep your digital presence for 2016 and beyond based on current trends
Ready to dive in? Get comfortable folks!
Lesson 1: Why you should focus on customer acquisition and retention
For the past 3 years, Street Fight has put out a survey where they ask small business owners about their marketing priorities. This year’s survey took place in June of 2014 and over 550 local merchants participated. You can see that customer acquisition is a major priority for local businesses, but the longer the business has been around, the more emphasis they place on retaining current customers.
And it’s much more likely to sell to an existing customer. The probability of getting a sale from a brand new customer ranges from5-20%, where the probability of selling to an existing customer is MUCH higher, at 60-70%.
To keep your business healthy, it’s crucial for local businesses to both attract NEW customers and nurture relationships with EXISTING customers.
Do you know the breakdown of your New vs. Returning customers every month? Do you know what a healthy percentage is? How do you keep track of this ratio? The good news is that reducing your customer drop off by just 5%, you can increase your profitability by up to 125% according to Bain and Company.
Lesson 2: Digital Platforms To Market Your Local Business
Small business owners rated Online Advertising, Email Marketing, Coupons and Loyalty programs as the most effective marketing media.
It’s critical to market yourself where your customers are. What customer review sites or social media platforms do your customers hang out on and reference?
When thinking about where you’re going to market your business, it’s important to understand the context of the situation your customer might be in WHEN they are engaging with your business. Also, how you might be able to better serve that person knowing that context.
We understand that as a small business owner you have very little time to dedicate towards social media and customer reviews so it’s important to market yourself where it matters.
- Yelp is the largest customer review site. They see over 140 million unique visitors every month. So this is a site you definitely want to pay attention to, claim your profile, optimize the page, update the description of your business and make sure you’re responding to reviews.
- Facebook is the largest social media platform with over a billion people on it and they’re creating over 5 billion posts a day! That is a TON of content. Which makes it even more important that you, as a business on Facebook, are creating original content & posting regularly.
- Google+: Keep in mind that Google is the most popular search engine and 8 out of 10 people read reviews before making a buying decision. Google+ sees 400 million active users.
- Twitter is the 2nd largest social media platform. There are over a billion people on Twitter who are Tweeting in real time. In one second, Twitter sees over 5,000 Tweets! This is also an opportunity for a business to provide feedback, answer questions and even build customer loyalty.
Besides social media and review platforms, it’s important to consider how your customers are interacting with businesses on mobile. Consumers are using their phones everywhere; at home, at the store and on the go.
Mobile apps like Belly and FourSquare are great for local consumers to discover your business. For example if they’re out walking their neighborhood and pull up the Belly or Foursquare app they’ll see your business. Foursquare has 60 million registered users — so those are customers you could be reaching. If appropriate for your model, you should also consider listing your business on appointment-setting apps like Whittl and PrettyQuick where consumers can discover businesses near them and book things like haircuts and massages on the go.
In the future, a website will not be enough. Are you thinking about where else to market your business?
Lesson 3: How To Build Customer Loyalty
There’s a reportthat comes out every year that looks at loyalty programs across the US and globally, and this year the data showed that American households are part of 29 different loyalty programs, but are active in only 12. How can you make sure you are one of the 12? At Belly — we’ve found a few things that work well.
Tip #1: Make sure your loyalty program is actually valuable to your customers
- First, pitch it clearly — what’s in it for the customer/how does it work? How many visits or purchases do they have to make before they get something in return? If you’re making your customers visit 20 times for a free cup of coffee, there isn’t much incentive for your customers to return — so make sure the rewards you offer are attractive to your customers.
- Second, is there a cool experience you can offer as a reward? We work with a lot of our Merchants to come up with unforgettable customer experiences they can offer. It’s important to offer a balance of monetary and experiential awards so that there’s something attractive for all of your customers. For example, a pizzeria we work with in New York City offers a pizza making class for customers who accrue enough points. Other companies offer skip the line privileges, the ability to name a sandwich and so on.
Tip #2: Help Customers Progress Toward A Goal Quickly
Once you sell the value and your customers are enrolled in your loyalty program, how can you make sure they stay engaged with your business? The trick is to make sure they are progressing to a reward they want quickly.
A study that originated out of Columbia in 1934 and was resurrected in 2006 proved that _moving customers toward a reward quickly will keep your customers engaged and loyal to your business.
- Back in the 30’s, researchers discovered that rats running a maze to reach food ran faster as they got closer. In layman’s terms, the closer we are to a goal, the more effort we exert to get there.
- In 2006, this principle was tested on humans. People given a punch card for a free cup of coffee after the punch card was full drank more coffee as they got closer to a fully stamped card.
Using this research, a quick tip that we implement with our Merchants at Belly is to offer double or triple points for a customer’s first visit.
- This works because customers view their bonus points as progress, making them feel closer to their reward.
- Across our network, we’ve seen that 90% of Belly Members who redeem a reward return to that business within a month, so we try to get them to “goal” as soon as possible to ensure repeat customer visits.
Tip 3: Don’t Underestimate The Power Of Free
Think about when you go to Costco. Free samples everywhere right?
Well last year, Costco published some figures about the success of their sampling program. In the past year, beer samples increased sales by 71 percent on average, and samples of frozen pizza increased sales by 600 percent.
Besides product education, sampling has deeper psychological powers. Reciprocity is a very, very strong instinct. If somebody does something for you — like giving you something for free — you feel a strong obligation to do something back for them.
The free sample is a hook that brings a customer in the door! Then, things like your product, service, experience and loyalty program bring them back. This is a great strategy, especially for restaurants to win new loyal customers.
Lesson 4: How to stay connected with your customers with right time, right place messaging
Thanks to social media, you can stay connected with your customers even after they’ve left your business. When it comes to responding to your customers online, it’s better late than never.
Social Media & Customer Review Sites
As for staying connected on Facebook, the frequency in which you post is important. To stay connected with your customers, it’s best to post 3-5 times per week. Social media platforms grant us with the opportunity to have terrific 2-way conversations. Like the example shown here – Z’s Crazy Good’s Facebook post. This post not only helped the restaurant to connect with 20 people (notice the Facebook Likes) but it also put Z’s Crazy Good right into Chris’s brain (a.k.a. appetite)! Thanks to Main Street Hub for the example!
In addition to responding to your customer reviews and posting on Facebook with the appropriate frequency, you can also stay connected with your customer via email and automated marketing.
Automated Email Marketing
Email marketing is a very important tool for building customer loyalty.
As long as you’re delivering valuable content and offers, your customers will open your emails. In fact, 58% of consumers do open emails from businesses they’ve bought from, and 53% say those emails affect their personal buying decisions. So bottom line, the emails you send drive customer engagement. Common occasions to send emails to your customers is if you’re having an event or a sale. Your customers want to hear from you!
Belly’s email marketing tool, Campaigns, is powerful because it allows you to not only send email campaigns, but also collect email addresses and track the emails you send back to in store activity!
Taking email marketing a step further, you can automate the messages you send. It’s no surprise that 42% of Merchants rate a lack of time as their biggest digital marketing challenge, with the average merchant spending about 33 hours per week on marketing activities — so let’s take something off your plate by automating your marketing.
One way to reduce your workload is to send offers and relevant emails or text offers based on a customer’s visit history.
For example, Belly Merchants can choose from from a First Visit Offer, At Risk Offer (30 days of no visits) or Lapsed Offer (60, 90 and 120 days of no visits) that targets different customer groups based on their buying patterns. We worked with a frozen yogurt chain in Pennsylvania, YoFresh, to send automated email offers that increased their customer visits by 45% over a 30 day period. Right time offers can be really powerful.
The ability to send right time, right place offers is here, and will become more common over the next few years.
In August, Target announced that they were testing Beacon in 50 stores. Other companies are entering the space too like Macy’s, even the MLB. It is certainly only a matter of time until small businesses adopt location based marketing techniques as well that provide contextual offers to customers.
For one, the technology needed for location-based marketing is here. Beacons are gaining popularity and consumers are already using mobile apps to interact with businesses.
In the not so distant future, you could be walking down the street and receive a coupon from your local grocery store. In fact, this is already happening.
The other thing I’m excited about as a marketer is the ability to provide offline to online targeting. Being able to retarget customers who were in your business on Facebook, Twitter or Google with relevant deals.
Lesson 5: How to prep your digital presence for 2016 and beyond
The image above provides a brief history of how businesses used to engage with their customers and how they will be expected to in the future. Where the customer journey used to be simple, “customer walks in store, makes purchase, leaves, and hopefully comes back,” it’s now convoluted with many channels, options and touch points making it hard for businesses to adjust.
To prepare for the future, it’s important to:
Invest in technology that “plays nice”
Think about how your POS system, payments provider, digital loyalty program, accounting software, employee scheduling and mobile apps work together to make your job easier. Choose tools that work nicely together so that you don’t have to be a small business owner, and a marketer and a CIO.
Start to define your mobile strategy
If you haven’t already, a good place to start is to audit where your business appears on mobile? What does your website look like? Are you listed on 3rd party apps? How will you use mobile in the future to engage with your customers?
Work to be faster with customer interactions and feedback
These days, consumers expect real-time feedback. Work hard to provide faster responses online when your customers start conversations with you on Yelp or via other social media channels.
Think about how you’ll build a complete customer profile across all channels and how your loyalty program will support your retention goals
The way customers engage with your business has changed — and will continue to get more complex. Invest in tools that will allow you to build a complete customer profile no matter what channel they are interacting with your business on.
Watch and listen to the full recording below to learn how to build a strong customer engagement strategy at your local business. Have questions you'd like answered? Tweet us @bellycard using the hashtag #loyaltymarketing.
The Full Spectrum of Customer Engagement: From Marketing to Loyalty from Bellycard.com on Vimeo.