Why Small Businesses Should Rediscover the ‘Lost Art of Loyalty’
By Elaine de Trafford, Area Business Manager, Barclays UK Retail and Business Banking
It is unquestionable that repeat custom is of huge importance to small businesses, and the majority recognise the significance of forging personal relations with their customers. But recent research by Barclays has shown that many small businesses are missing out on potential sales and growth opportunities by ignoring the impact customer loyalty can make on profitability.
‘Loyalty’ in retail has become a confused term, with loyalty cards and big discounts being the main weapon of choice for the big players. As a result, many small businesses may not feel able to compete with larger retailers on loyalty – but this is not the case.
The concept of loyalty has become synonymous with sophisticated marketing. But let’s not forget that small businesses on our high street have an advantage in still being able deploy more traditional loyalty strategies. And they needn’t be too scientific.
From a survey of 2,000 consumers, 59 per cent of them told us the key reason they feel loyal towards small businesses and independent retailers is because they are greeted with a smile and a friendly hello. Moreover, staff going out of their way to build rapport, good customer service and businesses remembering a customer’s usual order were all named as important factors in instilling loyalty. It doesn’t have to always be about accumulating points or getting a discount.
Our research also surveyed over 1,000 SME decision makers, to learn about their loyalty strategies. This identified a ‘loyalty gap’ between what consumers say they value and what businesses are doing. While there is a general understanding that personal touches make a difference, very rarely are small businesses consciously acting on it as a means of growing their business – and very few are developing their own customer loyalty strategies.
60 per cent of small merchants believe that it’s possible to increase revenue from current customers, but only half will look to capitalise on word of mouth recommendations over the next twelve months. Almost half (46 per cent) admitted they don’t focus on that smile and friendly hello that customers said they so valued and nearly half (47 per cent) don’t record customers’ previous orders.
But can these things really make a difference where it counts – in profit? In short, it can. In fact, 60 per cent of consumers said they were willing to pay SMEs a premium for a product similar to one available at a larger competitor. The amount that they are willing to pay depended on the value of the product, but the majority were willing to pay an increase of five to ten per cent and some were happy to pay even more.
Generating new custom is always vital, but getting customers to come back – again and again – should be just as, if not more, important. SMEs are in a unique position as they can embrace the traditional values and approach to customer service that consumers have said they like. That’s why Barclays are calling on small business owners today to consciously build on their natural advantage, encouraging them capitalise on it to help their business grow. The door is open for SMEs to increase their sales by fostering customer loyalty – it’s time to act on it.
Barclays is the first bank to reward its loyal business customers through its unique new Business Current Account. It’s available to all businesses by visiting www.barclays.co.uk/businessshapedbanking or speaking to a Barclays Business Manager.