Cross-Business Loyalty Rewards Program Business Proposition

Research has shown that acquiring a new customer is between 5 and 25 times more costly than retaining existing customers and that a 5% increase in customer retention can increase profits anywhere between 25% and 94%, (Gallo, 2014). In part because of these statistics, many businesses utilize loyalty rewards programs to both incentivize potential customers into trying their business and to retain their existing customers. Once a customer has joined a loyalty rewards program, they will bring in more revenue than those outside the program. For example, in the retail industry, members of loyalty rewards programs generate between 12% and 18% more revenue than their counterparts not participating in the loyalty rewards program, (Accenture, 2016). Creating an attractive loyalty rewards program can greatly boost a business’s revenue – if done correctly.

This Thesis proposes a business plan for a cross-business loyalty rewards program. There are two target markets for this business - small to medium sized business (specifically businesses that attract large numbers of repeat customers) and the customers they seek to attract. This cross-business loyalty rewards program will be made possible through management software that will allow these businesses to both manage their rewards programs and have access to tools that will allow them to collect data on their consumers’ habits, manage marketing campaigns, and allow them to better connect with their consumers. The aspect of this management software that will differentiate it from competitors will be the cross-business nature of the program. Points earned by a customer frequenting one business (e.g. restaurant) can be used in other businesses using the same program (e.g. hairdresser). By “sharing” consumers in this way, businesses will incentivize customers to try new businesses, greatly reducing the cost these businesses will invest in acquiring new customers while also helping to retain both existing and new customers, thus increasing revenue.