As corporations continue to search for new and innovative ways to attract and keep their customers, one method remains tried and tested: the customer loyalty program. For more than 200 years, companies have made use of loyalty programs in one form or another to attract new customers to their fold, as well as retain existing ones.
Today, our mobile phones abound with loyalty apps from our favourite stores, offering us discounts, promotions, and even the occasional exclusive offer. Many companies have already incorporated a loyalty program into their customer acquisition and retention strategies. If your business is currently considering it, let’s give you a few reasons why now might be a good time to take the plunge.
1. The currency of information
Information is a valuable commodity in building customer acquisition and customer retention strategies. Customer loyalty programs provide businesses with access to customer data in a way that brick and mortar stores often cannot. Loyalty programs can offer deep insights into which customer demographics are buying which products, which brands customers prefer, when customers are most likely to buy, and other spending habits.
All of this information can help to understand customers and tailor products and services better to suit their needs. Companies that display a good understanding of their customer base are more likely to build loyalty among those customers.
2. Build that revenue stream
Customer loyalty programs are great at promoting customer retention, which in turn does wonders for that bottom line! While companies are always seeking to attract new customers, research reveals that retaining customers may prove more profitable.
According to several studies, boosting client retention by just 5% can lift sales by anywhere between 25% and 95%. By promoting customer engagement, loyalty programs can assist in keeping customers coming back. It pays to build customer loyalty!
3. Keep those costs down
Besides increasing revenue, customer loyalty programs also play a role in keeping costs down. Several studies have confirmed that the cost of attracting new customers to a business far exceeds the cost of retaining existing customers. By promoting customer retention through constant engagement, loyalty programs help businesses build relationships with their existing clients. This increases the likelihood of a customer remaining loyal to that business, allowing companies to spend less time and money on acquiring new customers.
4. Free advertising
Existing customers can often be a company’s greatest advertisement. Happy customers mean loyal customers, and loyal customers have no problem telling their friends, family, and colleagues about their favourite businesses.
Loyalty programs allow businesses to go above and beyond in personalising and enhancing a client’s experience when interacting with their brand. That personalised experience goes a long way to ensuring customer satisfaction, which in turn could lead to those customers spreading the good news about your company. Your existing clients can become a catalyst for attracting new customers to your business!
5. Customer loyalty programs create a rewarding experience
Here’s a fun fact: customers like getting rewards from the companies they frequent. According to studies done, 69% of consumers choose a retailer partly based on whether that retailer offers a loyalty rewards program or not. Also, 50% of consumers will modify their spending behaviour to reach a higher tier within a loyalty program.
One more staggering statistic is that over 80% of consumers have indicated that loyalty programs make it more likely that they will continue doing business with a particular company. All of this points to one thing – the best loyalty programs are the ones that tangibly reward their customers’ continued patronage.
Businesses offering loyalty programs can increase customer retention by regularly giving customers savings on their purchases, providing surprise gifts, offering exclusive promotions, discounts, and possibly rewarding customers with points every time they spend. Tangibly rewarding your customers is a surefire way of building customer loyalty.
6. A measure of loyalty
Besides providing valuable customer data, loyalty programs also offer wonderful insights regarding the impact of customer loyalty on a company’s sales. Loyalty programs can track information such as repeat customer rates, program efficiency, and purchase frequency.
All of these indicators can assist a company in tailoring its operations to meet the evolving needs of its consumers. Businesses who can effectively garner information from their loyalty programs and using it to their advantage are more likely to stay ahead of their competitors in vying for the consumer’s attention.
Ready to dive in and get your own customer loyalty program?
These are just some of the reasons why more and more companies are infusing loyalty programs into their customer acquisition and retention strategies. Utilising a loyalty program opens up a world of information and insights for businesses. Through more significant levels of interaction, companies have the chance to get into the mind of their customer to better understand their likes, dislikes, and spending habits. The possibilities are endless. Now is the time for your business to consider a customer loyalty program. Read more about how UBU can help you.