At times, companies keep on consistently losing customers. Yes, the loss continues despite offering an excellent range of products or services. And this is when the loyalty factor comes into the picture.
As a loyalty management platform specialist, we receive many inquiries on the benefits of offering perks to selected members. Some entrepreneurs also wish to know if their organization requires one.
Here’s a look at compelling reasons to introduce a loyalty program:
#1. Offer the best to the selective group of users
Customers want guidance in purchasing; they want acknowledgement and a unique experience. Firms spend considerable resources in developing the vital ecosystem to impress consumers.
You certainly wish to use the extra charm to amaze existing clients and convince them to buy more. After all, who wishes to dish-out thousands of dollars in convincing the unknown or one-time buyers? Under the guise of a loyalty program, you can conveniently differentiate between consumers. Offer the best to consumers who are in a long-term relationship.
Loyalty programs are like a poster. They clearly say there’s something special, something valuable waiting for members. Shoppers who trust you will enroll and opt for a membership.
#2. Monetary gains you cannot ignore
Even small businesses are exploring the benefits of cultivating customer loyalty. Why won’t they? Remember, nurturing loyalty benefits in several ways.
A study published by Forbes offers exciting insights. Roughly 79 percent of shoppers suggest loyalty programs keep them glued to the brand.
Loyal consumers are five times more likely to make purchases from brands they love. Shoppers tolerate a few instances of bad experiences if they have developed a special attachment with the business.
No doubt, loyalty programs need dedicated funds allocation. But, it’s a small price for retaining existing clients. That’s still 6 to 7 times cheaper than acquiring new consumers.
#3. It’s time to “fix” issues
As step one, loyalty program strategists will analyze certain aspects of your business. Market research, customer profiling, CRM data analysis are the procedures performed.
Before launching the MVP, loyalty strategists highlight negative aspects and get them fixed. These exercises help in highlighting USPs for your service or product. Loyalty teams launch loyalty programs only after fixing the above issues.
Here’re top reasons that force consumers to move elsewhere:
- Poor customer service
- Lack of after-sales support
- A series of bad experiences with the brand
- The decision to move to a better quality product
- Irresistible offers from new entrants in the market
#4. Retrieving better market research-like data
Consumer behavior has drastically changed since the arrival of the coronavirus pandemic.
Brands constantly conduct market research activities to understand their target audiences’ purchase behavior. Did you know that the loyalty program management platform dashboard offers similar customer insights?
Which rewards or incentives do consumers in a selected region retrieve the most? What’s the difference in shopping patterns of paid and free loyalty program members? Which rewards fuel the desire to buy more? Which incentives fail to elicit a positive response from shoppers? Your loyalty program data helps you with answers to all these questions.
The information is as good as market research data. It also enables you to club selected products with the most sought-after rewards. Experimenting with various incentives becomes easy.
You can save a fortune by tweaking your marketing campaigns. Your brand can target ads for specific products to consumers in selected regions.
#5. Staying out of the “price-war”
Firms with strong financial credentials often use below-cost pricing to knock out rivals. The strategy helps in quickly gaining share from small companies. Consumers who do not have any attachment to your brand can change the ship. And so do price-conscious shoppers.
On the other hand, people who have an emotional attachment to your brand won’t leave you. Such individuals won’t risk going with the big bully. They fear missing out on the customer experience you offer.
Rewarding consumers, delighting, or surprising them does appeal to their emotions. So, investing in loyalty programs also protects you in case of a price war.
#6. Reduce the marketing costs
Spending handsomely on digital marketing is crucial for acquiring new consumers. But if your existing customers are loyal, you can take a break from gathering and chasing leads.
Retaining consumers helps in keeping marketing and consumer acquisition costs lower. You can spend the savings on other crucial areas of business.
Get the basics right
What’s your brand’s current customer loyalty rate?
You can track the net promoter score, customer loyalty Index, customer lifetime value, and repeat purchase rate to determine loyalty.
Is your data processing strategy in place?
Your reward program will use consumer information as the bedrock. Data plays a crucial role in offering a personalized experience. Therefore, creating a data strategy is the first step towards launching your MVP for a loyalty program.
What’s your organization’s goal? Is it retention, consumer acquisition, or building a community?
Cashback, points-based, tiered loyalty, coalition, fee-based and hybrid programs are highly appreciated. Choose the type of program depending on your goals.
Do your incentives align with the business vertical?
Choose loyalty program type and incentives according to your business vertical.
Earn and burn systems are perfect for brands with a high purchase frequency. On the other side, focusing on experimental tiers and privileges can work for luxury brands.
These factors are crucial in helping you tailor your loyalty platform features accordingly.
The right time:
Markets are slowly returning to the pre-pandemic levels. Consumer spending will move upward in 2022. The timeframe is best to introduce your loyalty program. Let experts develop a loyalty strategy and user-friendly loyalty software for you.