Funding Can Build Customer Loyalty and Profits
Loyal customers are essential for the growth and longevity of your business. Recognizing and rewarding them is a smart strategy to keep customers engaged. Funding can be used to help build customer loyalty and company profits at the same time. Investing in programs designed to improve customer loyalty and retention have been shown time and time again to actually increase the overall value of a customer. When a customer feels recognized for their loyalty, they spend more money. Obtaining funding to improve the way you interact with your best customers is a long-term investment which can yield big financial rewards.
Here are five ways to use working capital to ensure customers stay loyal to your brand and drive company growth:
1. Improve your company’s customer service.
Continually train your staff to offer better customer service—especially for repeat customers. Most people are willing to pay more for products or services when they also get good customer service. Consider investing in Customer Relationship Management (CRM) technology to help you track customer feedback and buying habits. The more you understand your customer, the better you can anticipate their needs, which means you can offer more targeted items and personalized care. The actionable data you gain can give you a real competitive advantage.
2. Improve the quality of your products and services.
Invest in research and development or inventory management technology so you can offer new products or streamline inventory. This lets you develop new products in line with customer feedback. When you shift your focus to the best-selling products, you can increase profits and better meet client demand. Overhauling your product line to remove slow-selling products often reduces costs, improves margins, and yields improved customer reliance on your business.
3. Create a customer reward program.
Customers like being rewarded. A loyalty program can involve giving perks based on a points, a spending program, or a fee-based VIP program offering special discounts and incentives. A rewards program is usually a low-cost way to boost customer loyalty and profits. The goal of any rewards program is a way to express thanks to your most valuable customers, who very often are you biggest spenders. This is an outstanding option to get quantifiable results and control costs. There are dozens of off the shelf solutions and various price points to meet the needs of every business.
4. Invest in your online presence.
A professional website will increase your company’s visibility and flexibility. Consider contracting a social media manager or hiring staff to run your social media. This lets you better engage with your customers online. Having an online presence and active social media channels is essential for today’s business. It’s essential your business is accessible wherever your customers spend their time because you can be assured your competition is already there.
5. Be active in your local community.
Consider sponsorships or donations to local events or organizations. Local engagement is viewed as giving back and positively increase your company profile. By showing your commitment to the community, you open a path to marketing and networking your business where you live. Don’t forget that there are also tax advantages when you support area non-profits.
Remember building customer loyalty is an ongoing effort. It’s so important to monitor the effectiveness of your strategies and adapt them as needed. Also, make sure to track the ROI of any customer loyalty initiatives to ensure your funding is being used effectively. Solid customer loyalty is the secret to ensuring long term revenue growth.
To learn more about funding strategies and other ways to fund your small business, listen to The Funding University Podcast with Seth Block, CPA. Nationally recognized financial industry expert, Seth Block is the host, as well as Executive Vice-President of ThermoCredit. Every month, The Funding University Podcast covers important topics like SBA lending, interest rate hikes, and has guests who are experts in the lending space discussing financial topics of the day. Tune in to monthly Funding University podcast at www.thefundinguniversity.com/podcast.
Bplans Blog: 8 Ways to Earn and Build Real Customer Loyalty: https://bit.ly/3Zbpu0H
Business News Daily: How to Build Customer Loyalty: https://bit.ly/3EzEZpB
Superoffice.com: 32 Customer Experience Statistics for 2024: https://bit.ly/3Zdqwcl
Beware of Fraudulent Online Lenders
Lending fraud includes any kind of deceptive action with intent to earn a financial advantage. Loan scams are just one very popular type of loan fraud. As a matter of fact, according to Consumer Sentinel Network, loan frauds are the fourth most popular type of identity theft with Financial Identity Theft being number one.
Business owners need to be careful to avoid loan scams—thieves can destroy your credit, swindle you out of cash, or even steal your identity without you even being aware until it’s too late. There are a few telltale signs to identify scams. First, if the lender guarantees approval of funds without any sort of due diligence or pulling credit reports, that lender might be sketchy. Reputable lenders want to see proof of responsible credit. Another red flag is if the lender isn’t registered in your state.
Another sign of a loan scam is the lender demanding some sort of payment up front, like a deposit or retainer for processing fees. Scammers may claim they need access to a bank account to cover insurance, collateral, or third-party charges. As with many scams targeting individuals, the fraudulent lender may also request stored value cards, like prepaid debit cards or gift cards, which are untraceable. Your contact may sound legitimate, but credible lenders do not request payment with stored value cards.
While it’s true that financial institutions may charge a fee for your application, appraisal, or credit report, any processing charges are later taken out of your loan. In most cases, those fees are less than a couple hundred dollars. If your lender is requesting thousands of dollars upfront, you may want to consider another lender.
You’ve heard the adage that if it sounds too good to be true, it probably is. If the loan process seems too easy, too fast, or you feel pressure to act immediately, the deal is likely fraudulent. It usually takes 30 days or more to close a loan. While fast loans do exist, they often come with hefty interest rates or unexpected charges, so be sure to do your research so you know what you’re signing.
Also, explore all alternatives when it comes to obtaining funding. Your business likely has more financing choices than you realize, and leaning on a financial expert for advice will help you avoid fraud in lending. Contact your preferred financial institution, an alternative lender with national financial affiliations, or a lending broker to explore your options. An informed borrower is a smart borrower who is less likely to be the victim of a financial scammer.
Listen to The Funding University’s podcast, where business leaders go to learn objective information about funding. Host and funding specialist Seth Block CPA and his guests discuss industry trends, how they impact your company, and what you need to know to make informed financial decisions. Tune in at www.TheFundingUniversity.com/podcast to hear the most recent podcast and be sure to subscribe so you never miss any of our educational discussions.
www.ftc.gov (Federal Trade Commission)
Real Estate as Collateral
If you’re seeking financing for your company, you may have considered a secure or asset-backed loan. Real estate is an excellent asset class to back this type of lending because it tends to retain value. While equipment values depreciate, and non-tangible assets can be volatile, real estate appreciates over time.
There are two options for using real estate as collateral. First, your company can use property it owns to guarantee a loan. Both personal and commercial real estate can be used for this type of lending. If you’re acquiring real estate with a loan, you can often use the property itself as the loan asset—similar to a home mortgage. The second option is using the equity built up in your home to finance your business. There are of course risks with both options, especially if your business is at risk of default.
Real estate can be a sound collateral choice for business owners. A real estate-backed loan typically offers up to 75% of the value of the asset. Plus, as a small business owner, you can generally get better credit terms and lower interest rates on an asset-based loan than on non-asset based financing. A lender is able to offer better rates as their risk exposure is less with an asset guarantee. Asset-backed small business loans typically include term loans or flexible options such as a business line of credit or a merchant cash advance.
Lenders in different industries may offer different terms and interest rates for loans against equipment or inventory, subject to market demands and depreciation. Real estate is a fairly robust asset across different types of industries so it can be a preferential asset to use for a loan if your company operates in a niche or specialized market.
If you want to learn more funding strategies for small business, subscribe to our newsletter here and tune into The Funding University Podcast. Each month lending expert and Executive VP of ThermoCredit, Seth Block CPA and guests unpack issues involving finance, lending, the economy, and how they all impact small business.
Business News Daily: What is Business Collateral? https://bit.ly/3qJGvSA
CIT.com: Common Types of Collateral Across Industries: https://bit.ly/465IW0W
GUD Capital: Asset Based Loans Using Real Estate as Collateral: https://bit.ly/3PDdou5
The Funding Strategies Conference presents:
Thursday, December 7th, 2023
2 PM ET - $29.99
Our experts will discuss interest rate hikes and how the higher rates may impact mergers and acquisitions,
the decision to buy or lease, upcoming SBA changes, offer debt servicing options, and predictions for 2024.
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