A report by Forrester Research found 72% of adults online belong to at least one loyalty program and those enrolled in loyalty programs report that they belong to nine, on average. 78% of respondents said loyalty programs save them money, and nearly half of respondents said loyalty programs influence what they buy⁴. Customer engagement in loyalty programs clearly seems to be a successful way to reward customers and keep them coming back for more.
In order to acquire and retain customers, brands need to meet and exceed customer demands. The most common customer demands include ‘make it easy for me’ easy access to products and information, a convenient and speedy customer experience. ‘Assist me’ as well as flexibility of in store and online options, the consumer also expects assistance throughout the purchase journey. ‘Inspire me’ consumers want a unique experience, and the increase in the use of AR in some brands’ stores and websites meet this expectation. ‘Convince me’ consumers base purchase decisions on what others say about a brand, this is all about the good reviews! And finally ‘Reward me’. PwC’s “The new retail ecosystem” report found that more than 70% of people are firm brand-loyal shoppers, and less than a third are willing to try new offerings. What’s more, many also responded well to loyalty programs and appreciate brands showing that they value customers. However it goes further than this; the loyalty program has to be personal to the customer⁶.
Truly understanding your customer means understanding their values and sense of worth. Depending on your industry, your customers may find more value in non-monetary or discounted rewards¹. So whether you offer a monetary reward such as a birthday gift, a free product or a discount⁶, or a value reward such as early/exclusive access or offer special experiences, you need to make the right choice for your customer base¹.
Customer retention: a loyalty card program can help build trust between you and your customers to keep them coming back². Not only will you build trust, but also an emotional connection by making your customers feel appreciated³.
There are many studies which have explained the relationship between loyalty program and retention rate. Annex Cloud’s study found Loyalty programs increase overall revenue by 5-10%, Loyalty members spend 5-20% more than non-members on average, and Loyalty program members buy 5-20% more frequently than non-members⁵.
Increased sales: Loyalty cards motivate customers to come back as often as they can to take advantage of the special offers². With loyalty cards you also gather valuable data from your customers about what they like to purchase. With this data you can make suggestions of other products you think they’d like, increasing the likelihood of them purchasing these suggested products³.
Product awareness: Loyalty cards encourage customers to try new products by offering them the chance to try it out for a discount or for free. If you are offering free products as part of your loyalty program, if they like the product there is a good possibility they will purchase it again².
Increased reach: Loyal customers who enjoy special offers, discounts, and rewards are more likely to encourage their friends to join. According to a 2016 report on brand loyalty, 73% of loyalty program members are more likely to recommend brands with good loyalty programs⁴.
Another technique to reach more customers is to offer special deals to those who recommend the business to other people or write a review, such as a discount on their next shop².
Gather data about your customers: With a loyalty program you can track and analyse your customers’ shopping habits². By encouraging your customers to fill out profiles as part of your loyalty program, you can get this vital data so you can not only personalise customer experience, but to also create targeted marketing campaigns for better customer communication³.
When considering a loyalty program, you also need to think about the use of smart phones. Having loyalty cards that also link with an online or app portal is essential in today’s market. According to a 2016 report, 57% of consumers want to engage with their loyalty programs via mobile devices⁴. Being able to track and visualise where the customer is in terms of points or which products they can get a special promotion on will encourage consumers to invest in your loyalty program, and invest in your brand.
Today, customers are more demanding than ever, expecting an experience that goes above and beyond just the available products or service. In order to offer a quality experience, you need to build brand loyalty. There is no doubt that loyalty programs have been successful for many different brands and are indeed worth investing in, and so for your loyalty program to be successful you must offer something unique and personal to your customer base.
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