Many business owners do not understand the benefits of a loyalty program for their customers and as a result, they miss out on an opportunity for increasing customer retention.
Customer loyalty programs are often underutilized because business owners don’t realize how beneficial they can be. Businesses that have implemented loyalty or rewards programs have seen increased profits in return. A loyalty program has many benefits that companies can enjoy when they incorporate it into their marketing strategy.
What is a Loyalty Program
Customer loyalty rewards programs have been in existence since 1793 when shopkeepers distributed copper tokens as rewards for future purchases. In 1896, the practice of using stamps to incentivize customer retention started gaining traction and it has stuck ever since. The basic ingredients have not changed much since.
If 80% of your business will come from just 20% of your customers, then it pays to reward and invest in customer loyalty. Companies can now find customers by building a relationship that’s based on shared values, engagement, and emotional ties with the brand. Customers are buying from companies if they feel like there is value beyond just receiving the cheapest products or services available.
Customers enjoy knowing they’re being rewarded for their hard work and getting points every time they purchase your products and services – not only does it make them feel better about buying but also means if enough others start using this as well then all those rewards will come back around. Customers are rewarded in exchange for taking certain actions–usually a purchase or a referral–but it can also include sharing on social media. Loyalty programs are a great way to maintain this customer loyalty.
The Benefits of a Loyalty Program
With a loyalty program, you’ll be able to acquire and retain customers over time.
1. Develop Customer Curiosity About the Loyalty Program
You need to make your loyalty program so fun and interesting that customers want to learn more about it. A successful loyalty program should engage and reward customers in a way that encourages repeat purchases and improves customer engagement and satisfaction.
To increase loyalty program success, align your loyalty program’s branding personality with your business goals. A spa should offer an exclusive and sophisticated VIP-themed loyalty program while a gym can create a customer loyalty program based on gamification for attracting new customers.
2. Make Your Business Stand Out
Loyalty programs are a great way to set your business apart from the competition. A simple buying journey for purchasing decisions, together with a great customer experience, are likely to result in existing customers remaining loyal to your company.
Loyal customers get greater value for their money and have no problem continuing to purchase products or services when they might be cheaper elsewhere because of how much loyalty means these days.
3. Strengthen Customer Relationships
Building a relationship with customers is an important part of any business. You can do so by curating custom messages and deals that will appeal to certain customer segments without just focusing on the transactional side of things, like making sales and fulfilling orders. It’s a great way to engage your customers, regardless of whether your business is small or big.
4. Increase Your Customer Base
A company’s customer loyalty and rewards program is a key component to long-term success. When it comes down to making the purchase, customers will usually choose the company that offers more benefits for them personally.
Whether it be price, discounts, or extras like promotions or deals from time to time. Implementing such programs provides consumers with perks that may draw new people in as well because they offer something different than competitors do so there are other reasons why someone would want to shop at your store over another retailer nearby!
5. Feature Exclusive Services
You may have a lot of choices when it comes to rewards, including credit cards and points. But if your company offers unique services that are hard to copy, highlighting these with a rewards program may help you stand out from the rest.
Rewards programs are a great way to reward your customers for their loyalty and exclusivity. You can also use the program as an opportunity to highlight special, exclusive services that would be difficult or expensive for competitors to replicate.
6. Retain Repeat Customers
Your customers will be coming back for more and you’ll reap the benefits as a result of implementing a loyalty program. Loyalty programs are an excellent way to reward customers with deals, discounts, and exclusive VIP invitations that they can’t find anywhere else.
Customer retention is essential to your company’s long-term success. It not only strengthens the relationship between you and your customers but also boosts your revenue in the long run. As a result of their loyalty, they trust that you will give them value for their money which increases confidence in your business.
7. Boost Average Order Value
Customers who participate in loyalty and rewards programs have been shown to spend more money than those who don’t. 18% of customers say they want to see product samples and coupons in retail packaging. At the spa boutique, customers can receive a sample of natural moisturizing body lotion for every $100 spent on spa products. This gives customers something to look forward to and encourages them to spend more as they attempt to earn their next reward.
8. Create Brand Advocates
Those who spend money on your business benefit your brand as they are the ones that spread the word. These brand advocates promote your company to their friends, family, and with their followers on social media sites. 92% of consumers trust recommendations from friends and family, opposed to any other form of marketing. Whether you reward your customers with points or offer them a discount on their first purchase for referring friends and family, these benefits attract new customers and help retain existing customers.
9. Generate Customer Referrals
Consumers know about your loyalty program because it’s a great way to save money and get good deals. But what they don’t always realize is that these benefits are even greater when referring to friends. A loyalty member who refers someone will have a 26% better customer retention rate, so you’ll not only be getting new customers but more profits as well.
10. Generate More Customer Reviews
Online customer reviews are just as reliable as recommendations from family and friends. Instead of you thanking your customers, they’ll be shouting out about how satisfied they were because many businesses offer rewards for positive feedback on websites like Yelp or social media sites such as Facebook or Twitter.
Reward Your Best Customers
Your most valued customers are the ones who use your loyalty program the most. This means that you should concentrate your efforts there to recoup one-time buyers and turn them into brand advocates as well.
Your program can grow rapidly if, by thinking outside the box, you use word-of-mouth marketing in a way that encourages consumers to talk about it organically. Your company can use an all-in-one referral marketing platform to identify your best loyal customers and reward them with their hard-earned incentives while driving more new customers to your business.