Loyalty programs for small businesses often fail to sustain the interest of customers. They often become too tedious to access, and the lack of sustainable funding often causes local establishments to give them up.
But a recent development in the UK has opened up a new and interesting approach to loyalty programs. Find out how Mi Rewards encourages people to shop locally and finds workarounds to the challenges of loyalty programs for small businesses.
Why Loyalty Programs for Small Businesses Often Fail
Even before the COVID-19 pandemic, loyalty programs for small businesses have tried to encourage the patronage of local establishments. In Portland, for example, a small, locally-owned group of restaurants created a shared loyalty program to reward their loyal customers.
However, like most traditional loyalty programs, this effort was inefficient and limited. Customers and members had to have their digital punch card of sorts, and reporting activities and purchases were manual and tedious.
It’s great that local businesses have the initiative to come up with creative loyalty programs to entice customers. From basic punch cards to Foursquare rewards, small businesses can also offer more than their products and services. The unfortunate fact about these approaches, though, is that they often fail to sustain interest in the long run. Even when they band together, local businesses simply don’t have enough resources to find or create a loyalty program that delivers sufficient and long-lasting value that motivates customers.
But a recent development across the pond may just be what these businesses need. Enter the UK’s Mi Rewards.
Mi Rewards: A Game-Changer?
Driven by the technology of Miconix, a Scotland-based fintech company, Mi Rewards is a high-tech approach to loyalty programs for small businesses. Currently, it’s powering loyalty programs sponsored by cities, even towns, across the UK.
So how does it work? Consumers link their credit or debit cards to the app’s platform. The customer data from that is then shared across the participating businesses: pubs, restaurants, retailers, and other merchants. They use the data to understand and serve their customers better.
How about the challenge that comes with the funding? That’s solved by a simple mechanic: a raffle draw.
See, traditional loyalty programs for small businesses would exchange qualifying purchases with redeemable points or currency. Mi Rewards also makes use of that mechanic, offering one point for every £1 spent. However, every ten points accumulated entitles members to a monthly draw entry, where they have a chance to win prizes from the participating merchants. The cost of the program is minimal, as only winners receive prizes.
Now, for some, the incentives might not sound as powerful as what other loyalty programs from big companies can provide. But creative loyalty programs like this offer an interesting structure that allows local businesses with limited funds to participate. Furthermore, the sense of community and the engagement this brings for local merchants in small towns is a game-changer for the loyalty industry.
The Future of Creative Loyalty Programs
Recently the Maldives became the first country to offer a loyalty program. Now Mi Rewards enables small towns and cities to field their own programs. The unique focus on local commerce might well propel it to success in the future.
Looking forward, this trend might not take too long to catch on, as well. Such creative loyalty programs for small businesses helps local establishments re-engage customers they’ve temporarily lost due to the pandemic. Indeed, small businesses do need the support, after the negative economic outcomes of COVID-19. Before you know it, your local municipality might just announce its own loyalty program real soon!
The only question left is this: can larger brands scale and deploy such technologies? Only time will tell.
What do you think? Let us know your thoughts.