Your retail business needs a retail loyalty program. According to statistics, customers you already have spent more than new customers, and it costs more – via advertising – to obtain a new customer than to keep an old, loyal one.

f you’re a retail business, you need a retail loyalty program. Why? Because according to statistics, customers you already have spent more than new customers, and it costs more – via advertising – to obtain a new customer than to keep an old, loyal one. Businesses are always measuring Customer Acquisition Cost (CAC) versus Customer Retention Cost (CRC). (Don’t you just love acronyms?) Do any search online and you’ll find statistics similar to this from Wheelhouseadvisors: “70% of companies say its cheaper to retain a customer than to acquire one, while others have suggested that the cost of acquiring a new customer can be as much as seven times more expensive.” According to an article in Forbes, returning customers typically spend 67% more than new ones. This is not to say that you can ignore new customers – ideally, you want to turn them into repeat customers and the way to do that is to offer a loyalty program.

While a loyalty program is usually successful, it must be designed in such a way that you are receiving ROI – return on investment. You can’t give away too much so that you’re not making any money on the purchases of your return customers! When you set up your loyalty program, make sure you are able to measure purchase frequency, especially so that you can compare purchases from members of the program and purchases from non-members. The equation for purchase frequency is simple: divide the total number of your orders in a given month by the number of unique customers.