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The enduring bonds of loyalty: Dedication to the small business

Christine Lazauskas Senior Director, Client Development 06/09/2023

In the vast landscape of commerce, small businesses hold a unique place in the hearts of individuals on a national level. The allure? A sense of connection. A pillar of pride within a community – more than merely an establishment offering products and services. From recurring patronage to active participation in loyalty programs, small businesses continue to perform and succeed against corporate enterprises.

59% of Americans actively participate in loyalty programs offered by small businesses, with high-income earners emerging as the top participants (78%)

With an apparent deep-rooted affinity towards local establishments, our research reveals that a third of American respondents (37%) frequent small businesses monthly, with another third (32%) doing so every week. Customers’ sense of self and value-driven experiences allow for such a deeper appreciation for the people behind the brand, with ease of location being a significant factor being an additional key factor. Approximately two-thirds of American respondents (67%) express their loyalty to local businesses due to their proximity, convenience, and connection fostered by these nearby establishments, creating a sense of belonging within the community more generally.

Moreover, 58% of respondents reveal that their support for small businesses stems from their distinctive products or services. These unique offerings distinguish small businesses from their larger competitors and serve as a testament to the innovation and creativity inherent in local entrepreneurship.

The Power of Word-of-Mouth

In the digital age, where opinions are shared with a single click, word-of-mouth recommendations continue to wield significant influence. An overwhelming majority of respondents (88%) have recommended a small business to someone else at some point. Among this group, high-income earners stand out, with an impressive 96% leading the way in supporting local establishments. Recommendations serve as powerful endorsements, reinforcing the bond between small businesses and their loyal customers, not only amplifying the growth and success of local establishments but also contributing to the fabric of community trust.

The Resilience of Loyalty Programs

Loyalty programs have proven to be a reliable tool in cultivating and sustaining customer loyalty. 6 in 10 Americans (59%) actively participate in loyalty programs offered by small businesses, with high-income earners emerging as the top participants (78%). Millennials and parents follow closely behind, both demonstrating a participation rate of 72%. It’s no secret that loyalty programs work. Historically, they’ve shown to be a way to incentivize, reward repeat business, and foster a sense of exclusivity and connection with customers. And in small businesses, it’s no different. 6 in 10 Americans (59%) are likely to recommend a small company to others based on their loyalty program experience. Once again, high-income earners lead the way in enthusiastic recommendations at 76%, followed closely by Millennials (73%) and parents (72%), an incredibly significant amount. This virtuous cycle of recommendations across both the loyalty program and active participants in the brand transforms satisfied customers into brand ambassadors.

When asked about loyalty enhancement, respondents provided valuable insights. Most (58%) desired exclusive discounts or rewards, recognizing the allure of feeling valued as a loyal customer. Additionally, 52% supported improving online presence and accessibility, acknowledging the importance of digital platforms in today’s interconnected world.

Loyalty, though strong, is not impervious to challenges. When asked about barriers to supporting small businesses, respondents revealed concerns about higher prices than larger businesses (49%) and limited product or service offerings (44%). For high-income earners, the limited range of products or services was cited as the primary reason (63%) preventing them from wholeheartedly supporting local businesses.

However, amidst these challenges, a beacon of loyalty remains. A significant proportion of respondents (39%) have never switched their loyalty from a small business to a larger competitor. Among this group, Boomers stand out, with 54% showcasing unwavering support. For those who have switched, lower prices (28%) and broader product/service ranges (21%) were the driving factors.

The Significance of Local Support

Supporting local businesses has transcended from a mere preference to a strong value most Americans hold. A resounding 80% of respondents deem this support crucial to the well-being of their communities. This sentiment is particularly pronounced among high-income earners (92%) and parents (89%), highlighting the recognition of the pivotal role small businesses play in nurturing vibrant local economies.

The dedication to small businesses goes beyond mere words. The survey reveals that 6 in 10 respondents (63%) are willing to pay slightly higher prices to support local establishments. This figure skyrockets to an astounding 83% among high-income earners, and a willingness to invest in their communities reflects a deep-rooted belief in the value small businesses bring and the desire to see them thrive.

From consistent patronage and word-of-mouth recommendations to active participation in loyalty programs, the bond between customers and small establishments indeed grows stronger. Despite challenges, Americans remain committed to supporting their communities and fostering the growth and prosperity of small businesses, with a real sense of dedication to the entrepreneurs making up their local and virtual communities.

For more insights on the work we do with customer loyalty click here.

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