7 Ways Local Merchants Can Foster Customer Loyalty

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It’s time to move on from pricing games. If local merchants want to compete against national chains and e-commerce giants, they need to start focusing on the customer experience. According to a survey by Yodle, 96% of consumers think local businesses beat chains on personalized service, and 72% are willing to pay more at a local business for higher quality work or products. But fostering the type of loyalty that runs so deep that customers are willing to pay more for a product isn’t easy. That’s where hyperlocal marketing strategies come into play.

“Many merchants have hesitated to make changes to the way they’re currently marketing—or really, not marketing—because they’re scared of change,” says Michael Gross, founder of the customer loyalty platform, SpringBIG. “But change brings opportunity. Instead of running away from it, they should lean in.”

Here are seven unexpected ways that local, brick-and-mortar merchants can lean in and improve the way they foster customer loyalty.

1. Incentivize employees to sign up more loyalty members. “Pay your cashiers $.25 to $.50 per transaction when they sign someone up to your loyalty program, and then follow up with a special promotion. If you think about it, this is your best advertising. Those that aren’t interested in your business won’t sign up regardless (zero cost), and those that do sign up could potentially become your best customers. This means you are paying for success, which is the ultimate form of marketing. You don’t need to do this all the time, but do it for a one-week to two-week period every quarter, or when you see a lull in new loyalty customer sign ups. Once you find the best cashier, give that person a raise and make it part of his or her job duties.” (Doron Friedman, SpotOn)

2. Get customers involved in an eco-friendly initiative. “Launch an energy reduction program at your business, and let your customers know the ways you are reducing your energy footprint. Install energy efficient lights, reduce water consumption and control energy use. Not only will you cut operating costs, but your customers will become more loyal. Nielsen found that 55% of consumers will pay more for a product from a company committed to a positive environmental impact. When you show you care about conserving energy, your customers care back.” (Walter Dubowec, Firefly Rewards)

3. Use seamless data capture. “Seamlesss data capture is key. Merchants need to incorporate a user-friendly technology to encourage customers to give away their valuable information. Gone are the days of taping a piece of paper and a pen to the checkout counter and hoping the customer writes down their information. Today, there are cool technologies which not only simplify collecting customer data, but can also encourage the customer to part with their data.” (Michael Gross, SpringBIG)

4. Piggyback on the efforts of CPG brands. “Retailers are missing out on a massive revenue opportunity that they may not be aware is available to them. Retailers have always been engaged with brands/CPGs trade budgets, but during the past couple years payments technology has advanced and opened new opportunities that allow them to deliver and receive significant value from brands’ national media spend. CPG brands spend billions of dollars on consumer marketing that, at best, has always been a indirect benefit for retailers by randomly driving consumers to buy products at their stores. Thanks to innovative advertising software solutions, retailers are now able to engage directly with national brands to increase footfall, cut transaction costs and personalize consumer promotions.” (Tom Burgess, Linkable)

5. Hand out rewards at random. “Have fun, and surprise your customers with a small reward like a $5 or $10 gift card redeemable on their next purchase. Hand out these random rewards to customers who you see doing a good deed for others or when you just feel like saying thank you. Unexpected perks can enhance loyalty and raise spending by as much as 10%. Post pictures of these customers on your social media pages and spread the word that you truly value their support of your business.” (Walter Dubowec, Firefly Rewards)

6. Rethink your communication strategy. “Many merchants are not communicating at all, or their communication strategy is ineffective. Most brick-and-mortar retailers are still emailing their customers. The problem with email is that it’s so ’90s. People want to be alerted immediately and seamlessly. Email by nature is something that consumers check periodically, while texts are by nature instantaneous. Texting has a 98% open rate vs. email, which has an average of 14% open rate. Social media is another powerful communication tool. Forty-three percent of consumers are more likely to buy a new product when learning about it on social media, and 72% of social media followers are more likely to make a future purchase. Retailers should choose a technology that is multi-medium, allowing them to leverage all forms of communications rather than being restricted by inferior technology.” (Michael Gross, SpringBIG)

7. Don’t be afraid to get physical. “Your staff is the front line to new sign ups. Physically hand each customer a card, explaining that it adds them to a VIP program, and make it a goal to get an email address from every customer who comes through the door. Then show your customers sample rewards so they know exactly what they get for frequent visits.” (Doron Friedman, SpotOn)

Stephanie Miles is a senior editor at Street Fight.

Interviews have been edited for length and clarity.

Stephanie Miles is a journalist who covers personal finance, technology, and real estate. As Street Fight’s senior editor, she is particularly interested in how local merchants and national brands are utilizing hyperlocal technology to reach consumers. She has written for FHM, the Daily News, Working World, Gawker, Cityfile, and Recessionwire.