With the softening economy driving budget cuts across the board, many small businesses are left wondering how they can compete with the deep pockets of large chains. Consumers are watching their wallets closely, and businesses of all sizes are finding it difficult to attract new customers and hang on to current ones. It’s difficult for small businesses when their corporate brethren can afford to offer lower prices that catch the eye of thrifty consumers.
So, what should small businesses do to compete with their larger counterparts next door?
Many small businesses, from restaurant to retail, have found loyalty programs an effective way to retain customers and drive sales in the slow economy. Programs tied to customer loyalty or gift cards allow a business to identify its most profitable customer segments, make targeted offers at the point of sale, and influence customer behavior with personalized rewards. The result is an increase in brand loyalty and profitability.
As fickle customers are coming to expect a reward for their loyalty, big chains like Starbucks have begun to mimic the successful formula of their smaller counterparts. The mom-and-pop shops may just be on to something: Anticipating a customer’s needs and offering a truly personalized experience keeps ‘em coming back for more, time and time again.
Want to improve the way you run your business? Entrepreneurs, academics, and consultants from diverse industries offer practical advice on a variety of topics each business day.
To submit a tip for consideration, first check our archive of previous tips to make sure you're not repeating a tip someone has already contributed. Then send the tip to Small Business channel contributor Michelle Dammon Loyalka. Because of the volume of material she receives, she may not respond to each individual.