As an entrepreneur, business growth, new customer acquisition, retention, and high revenue are a few things that are always on your radar.
However, one often undermined business strategy to retain customers and multiply your business is loyalty programs. They’re an effective way to show your old customers gratitude. It’s like saying, “Hey, thanks for sticking around!” But why are they such a big deal? Let’s find out.
Decoding loyalty programs
Companies use loyalty programs to incentivize customers who do repeat business with them. It is a strategy to ensure customer engagement and retention. Implementing a loyalty program plugin helps a business expand its customer base. While some businesses reward consumers depending on how much they spend, others employ a point system. Special offers and promotions are among the additional benefits that loyalty programs provide. Businesses often use email lists to notify loyal customers or loyalty program members about exclusive deals, encouraging them to keep shopping.
Loyalty program benefits
It’s well-established that loyalty programs are now essential to a company’s long-term, sustainable growth. Don’t believe us? Take a look at these numbers.
According to a Forbes article, a whopping 62% of Gen-Z customers are heavily influenced by a loyalty program. The same report suggests how a loyalty program makes the overall brand experience better for 32% of customers. To build lasting connections with younger consumers, brands must understand the key factors that influence Gen Z loyalty and drive their engagement. Still contemplating whether to invest in a loyalty program or not. Let’s deep dive into the benefits loyalty programs offer.
- An edge over competition
A study found that 71% of customers consider loyalty programs to be an important aspect of their brand relationships. Well-executed brand loyalty programs are a simple way to set yourself apart from other businesses. Your ability to retain customers will depend on the quality of experiences you deliver and the value you can offer.
Loyalty programs reward clients for positive actions (purchases and referrals) in the form of points, discount coupons, gift hampers, etc. Members of a loyalty program are more likely to purchase from a brand they are a member of even if they find the same goods cheaper elsewhere if they find the rewards lucrative.
- Boost AOV and recurring business
Loyalty programs encourage customers to make a high-value cart in a single order to “level up” to the next VIP tier by leveraging offers, and schemes, and accumulating more points for future redemption. As a result, your average customer value (AOV) can increase significantly.
Punch card promotions are another tool that brands may use to encourage customers to add additional items to their cart by rewarding them for making larger purchases. Over time, all of these strategies increase AOV and foster general loyalty.
- Increase CLTV and retention
By providing consumers with excellent customer service and incentives to return, you can boost retention and ultimately increase customer lifetime value (CLTV).
Customers who are loyal to a company expect special treatment and engagement from them, allowing companies to sell more. For instance, if a member has 495 points and you have a new reward that you’re giving away at 500, you can contact them to let them know how close they are to receiving a free present. You’re building relationships in addition to revenue.
- Better engagement online
Those who are “in the know” have a sense of exclusivity and are plagued by FOMO (fear of missing out). Online shoppers who participate in loyalty programs receive preferential treatment and a sense of community.
You can offer new products or flash sales to your highest tier first by implementing a tiered loyalty program. While your lower-tier members will be encouraged to make more purchases and climb the ranks for greater benefits, your premium clients will feel as though they are receiving genuine value from your loyalty program.
- Converts customers to brand advocates
In a survey of more than 2,000 consumers, it was discovered that the majority of brand-loyal consumers (59.3%) would recommend their favorite brands to friends and family, expanding their pool of possible clients. Recall our earlier statement that customers place greater faith in friends and family than in brands. It benefits both parties. Customer loyalty and happiness will drive brand engagement beyond sales.
A good loyalty program not only helps a brand get more customers but it converts them to brand advocates. Offer rewards to loyalty members who write about your brand or product on social media or get you a new customer. You can use loyalty benefits as an incentive for any action you want your consumers to perform, like sharing a discount coupon or subscribing to your newsletter. The people who will do the most good for your brand are your best customers.
- Omnichannel engagement for deeper connect
Today an average customer uses multiple communication channels to connect with a business. As a result, most businesses integrate their loyalty programs across communication channels like messages, SMS, chats, email, social media, and more ensuring better brand reach. It also allows customers to engage with your brand on multiple channels and read the benefits of your loyalty program. This ensures a deeper connection with your customers and a seamless experience for them.
- Access to customer data
Loyalty programs are a goldmine of data for any business. When signing up, customers provide a plethora of data such as their anniversary and birthday information, family information, personal shopping preferences such as frequency of making a purchase, budget, and more. Brands also get an insight into their spending habits, buying behavior, and more which helps drive personalized campaigns and better marketing strategy.
- Increase brand credibility
A successful loyalty program with a huge member base increases people’s trust in a brand. It helps create an aspirational value in your customers’ minds. Also, happy satisfied customers are most likely to write positive reviews with a 4 to 5 star rating which further cements the credibility of your brand. 94% of purchases made on eCommerce sites are for products with four or five stars, according to research on the platforms. This demonstrates the amount of faith customers have in the advice of their fellow shoppers.
- Opportunity to cross-sell and upsell
Loyalty programs provide brands with a platform using which they can encourage customers to buy related or similar products by offering them special discounts through their membership. Cross-selling and upselling have been a time-tested technique for businesses to do more sales. Both become easier using a loyalty program.
- Stay afloat in tough times
Economic downturns are a part of every business and economy at large. In the recent past, there have been many instances such as wars, pandemics, and natural disasters which have had a significant negative impact on the global economy. Loyalty programs enable businesses to stay afloat at these times as members would prefer buying from businesses whose loyalty programs they are a part of to leverage the benefits they get. Also, the customer data gathered via loyalty programs helps businesses better prepare and strategize for such situations.
Conclusion
So, there you have it! Loyalty programs aren’t just perks; they’re real game-changers for businesses. They ensure customers continue to engage with your business… By rewarding loyalty, encouraging engagement, and gathering valuable insights, these programs help businesses thrive in the long run. So if customer retention, growth, and staying ahead of competition is your priority, a loyalty program might just be your ticket to success!
LoyaltyXpert has a robust loyalty management platform to help you better manage and implement loyalty programs. If you’re looking for a loyalty solution partner that will stand with you no matter what, look no further. Get a free trial or book a demo with LoyaltyXpert right now to discover innovative strategies for turning customers into devoted advocates.
