It’s been said, “If you want loyalty, get a dog!” That may be true in our personal lives but obviously not in our business lives.
Most people would agree that a good definition of being loyal is as Merriam-Webster defines it: “Unswerving in allegiance.” Isn’t this what every business owner wants in its customers? How do we achieve that?
Go ahead and search for the definition of a loyalty program and you’re certain to find it referring to marketing. One definition by Wikipedia (and who doesn’t love Wikipedia?!) is: “Loyalty programs are structured marketing strategies designed by merchants to encourage customers to continue to shop at or use the services of businesses associated with each program.”
However, most big-ticket retailers, such as furniture or bedding stores, don’t embrace traditional loyalty programs, due in large part to the low frequency of repeat visits. So, I’ll refer you back to the definition above. It says …to encourage customers to continue to shop at or use the services of… It doesn’t mention how frequently.
We know that furniture retailers spend approximately seven percent of their annual sales advertising and marketing to achieve those sales, most of which is geared toward acquiring NEW customers. But, in fact, acquiring new customers is more difficult (and expensive) than achieving repeat purchases from an existing customer.
Retail loyalty programs take effort and expense to introduce and maintain. This, along with less-than-frequent repeat purchases made in these stores, is why most big-ticket retailers don’t embrace a traditional loyalty program. And, most consumers already have many different loyalty-based accounts. Convincing them to add another without a very tangible benefit, is a tough job.
The missing ingredient in creating loyalty is an accessible, well-rounded finance program. Retailers who don’t think about financing as an inherent loyalty program are missing the boat. The ones that enable the less-than-prime credit consumer to apply and be approved for a financing program to purchase goods in its store create immediate loyalty without either the retailer or consumer really realizing it. When it’s time for the consumer to make another big-ticket purchase for products sold by that retailer, he or she is confident financing is an option in that store, and therefore more likely to shop it.
Better yet, given they’ve made their payments on time from the initial purchase, chances are their FICO score has improved (again, thanks to the retailer offering them a program to allow this to occur!). This means the next purchase using this retailer’s financing program could be at more favorable terms, such as no-interest for six or twelve months.
Financing a customer’s purchase is a much simpler way to create “stickiness” with the customer than a traditional loyalty or rewards program – you satisfy their immediate need or want while creating a positive mindset that financing a purchase in your store is a sure thing.
Now, how do you spell loyalty? F, I, N, A, N, C, I, N, G. That’s how!