3 Things to Know About Loyalty Programs
Category : Marketing
3 Things You Need to Know About Implementing a Loyalty Rewards Program
What’s the smartest way to earn solid returns on your company’s marketing investments? In order to build recurring, long-term income from sales more and more companies are implementing customer loyalty programs.
It’s a fact that retaining customers costs far less than acquiring new ones, and people who already know your brand are more apt to purchase from you again.
Statistics show that established customers spend more per purchase, are happier with what they buy, and are a prime source of positive word-of-mouth advertising.
Loyal Customers Should be Rewarded
It makes sense to devote marketing muscle, and dollars, to existing customers. Every company does what it can to bring in new business, but because existing customers spend more and stay longer, there’s even more reason to market to them.
Loyalty programs aimed directly at your existing customer base are the ideal way to make these “golden” customers happy and keep them coming back.
What are the key benefits of loyalty programs like these and how can marketing professionals get in the game quickly?
- First, you don’t have to start from scratch. You can learn from companies that have been playing this approach for decades, and playing it very well.
- Second, you should look into using mobile apps to maximize the effectiveness of whatever type of loyalty program you choose to employ.
1. Loyalty Program Keep Customers Happy and You In Business
If we start to list all the benefits of loyalty programs, we could fill a whole textbook easily, so let’s boil it down to the benefits that all businesses experience.
When you develop your loyalty program, focus on the following benefits it will bring you:
It’s all about returning customers, not getting new ones
A good loyalty program will be specifically tailored to the needs of frequent customers, while one-time shoppers won’t benefit much from it.
If you want your marketing dollars to go where they’re most needed, that means they’ll be spent on the customers who always return. Those one-time buyers or shoppers who only show up for major clearance sales will not, and should not, be your primary loyalty program users.
You’ll get more feedback on what’s good and what needs improving
Loyal customers tend to be much more vocal than a one-shot or infrequent buyers. That means you have more opportunities to engage them in writing, over the phone, and through text.
An engaged customer is ready and willing to hear about new products, special sales, seasonal bargains and other “inside” promotions designed for the loyal buyer.
You’ll be able to increase the value of shopping carts
Marketing to loyal buyers offers endless opportunities for companies to ramp up their average shopping cart amounts. You can offer discounts on related products and accessories, or suggest exclusive bundles.
After a certain amount of time has passed since their last purchase, consider rewarding the loyal buyer with a low-cost extended warranty or similar add-on.
You will be able to use the data you gather to predict trends and surges in demand:
The data you collect with various digital tools on loyal buyers can tell you all sorts of things about how to structure your other marketing efforts.
You can use comprehensive customer data to determine what items are best-sellers, which ones have seasonal cycles, and what new products might be profitable.
2. Loyalty programs help increase customer retention rates
Reams of data and marketing studies have shown that customer loyalty programs help keep the most frequent spenders in your camp.
In fact, such programs deliver revenue increases to the tune of 5 to 10 percent. Loyal customers spend 5 to 20 percent more and buy 5 to 20 percent more frequently than so-called “casual,” or one-time customers.
How an App can help you Keep Customers
Business owners should never neglect the potential effectiveness of mobile apps as part of the loyalty program scenario.
Consider that upwards of 90 percent of the time that people spend on their devices takes place within particular apps. On top of that, app development has become streamlined and widely accessible too.
Mobile apps do two things very effectively: they super-charge rewards programs and augment the current relationship you have with your customers.
Starbucks was one of the first big companies to use a mobile app as the central point of its customer loyalty program.
It’s allowed the coffee giant to collect massive amounts of useful customer data and calibrate its marketing efforts to the smallest detail. They left nothing to chance.
3. How you Reward Customers Plays a Big Role
There are hundreds of ways to fine-tune a loyalty program. Here are the top choices among marketers who are familiar with the playing field:
Keep your Rewards Versatile:
All customers appreciate choices, and that rule applies to rewards as well. Most companies with successful loyalty programs offer between 5 and 20 different rewards and cycle part of the offer regularly.
Make rewards neither easy nor difficult to obtain.
There’s no sense in offering a reward that’s too hard to acquire or takes months to earn. Most customers won’t think much of such a loyalty program. They will also place no value in rewards that are too easy to obtain. Make your rewards reasonably challenging to earn and people will appreciate them more.
Build a “loyalty ladder” based on a number of purchases or amount spent.
Try to reward “more loyalty” with better and better items or rewards. It only makes sense to differentiate between someone who spends $100 and $1,000. That’s why all super successful loyalty programs have reward ladders.
Loyalty Pays Off For Everyone
Loyal customers keep you in business. Nurture the relationship you have built with them by going above and beyond to keep them happy. Each of their purchases should remind them that you appreciate them returning to you over and over again.
Let them know about new deals and sales via your own app. In a marketplace where consumers are already connected to mobile apps they like, it makes perfect sense to make a brand-related app the centerpiece of any loyalty program.
Author bio: Ashley Wilson is a freelance writer interested in business, marketing, and tech topics. She has been known to reference Harry Potter quotes in casual conversation and enjoys baking homemade treats for her husband and their two felines, Lady and Gaga. You can get in touch with Ashley via Twitter.