The Impact of a Customer Loyalty Program in a Business
If you are in business, you know the importance of customer loyalty. There is no need for rushing to get new clients if you cannot maintain the ones you already have.
In the past, marketers were focused on bringing new clients, but then they realized that to boost sales and maintain them – they had to work on customer retention.
The annual research done by the State of Marketing showed that in two years time, customer loyalty programs will have increased by 80%. Its effectiveness has been seen in many firms as 63% of highly profiled salespeople are already using it.
What is a Customer Loyalty Program?
Customer loyalty can be defined as a marketing method where a firm recognizes the users who buy their products more often or engage with their services.
There are many ways of showing appreciation to loyal customers. For example, a firm may give points to a client every time they purchase a product and even move them to a higher level.
It may also be given as an incentive for promoting a brand. Incentives may include coupons, rewards, access to extra services, or free products.
If your business is new, spending money on gifts may not sound like a great idea. However, considering the reward, it is definitely a wise move. A study showed that customers with customer loyalty programs spend 18% more than other clients.
Giving a client an extra gift for purchasing a product from you validates their decision to shop with you – and to be honest, everyone just loves a gift.
For every cent that a company spends on a customer loyalty program, they get bigger rewards.
Why are Customer Loyalty Programs Important?
In an era where there are so many competitors, customer loyalty programs are what differentiates you.
You want your customers sticking around to build a stable income. Fortunately, loyalty programs can be created regardless of the niche you are.
Here are all the benefits of a loyalty program;
1. Better Customer Retention.
Gone are the days when a customer only used price as a reason to purchase a product.
There are now considering their emotional connection to a brand in their purchasing decisions.
Loyalty programs give you the chance to interact with clients and know their values.
Higher retention helps a firm maintain high sales, which is the goal of every for-profit organization.
2. Increased Customer Referrals.
This is probably the only trusted form of advertisement because it is considered unbiased. If your client recommends your products and services to their friends and relatives, you are sure of adding another loyal customer in the list. Research shows that clients referred by your customers have an average of 37% retention rate.
Through the loyalty program, you retain your initial customer as well as the referral.
Having happy customers who are willing to stay and continue using your services is easier and cheaper than having to acquire new customers all the time.
Chasing new customers costs 25X more than retaining existing consumers.
4. User-Generated Content and Reviews.
If your website is full of positive reviews from your customers’ praises, you are definitely going to receive new clients. Happy customers do the marketing part for you. Customer reviews are almost as effective as referrals.
How to Create a Customer Loyalty Program
Now that you are aware of the benefits that come with the customer loyalty program, how do you go about launching an effective program for your company?
Here are some insights to guide you;
1. Choose a Catchy Name
How many loyalty programs do you see in a day? You probably cannot keep count. Among them, you only click one or two, and sometimes none captures your attention.
This explains why the first step of creating a successful loyalty program is creating a catchy name. A unique name captures the attention of the buyers. A good name should not tell the whole story of the program but raise curiosity.
2. Give Your Loyalty Program a Deeper Meaning
The aim of creating loyalty programs is to get customers to spend more, but you also have to add the value to your clients.
Many consumers see this as a scam to spend more, so they are not very open to it.
However, for firms who show the value of their programs like Amazon Prime that requires $100 to join every year – they still get their rewards.
When Amazon says its free delivery, it is more than free two-day shipping. It comes with valuable rewards such as free delivery from famous grocery stores, free TV Shows, movie streaming, just to mention a few.
3. Find Multiple Reasons to Reward Your Customers
To show your interest in the loyalty of your customers, do not just reward clients for purchasing.
For example, those who watch your videos, refer you, and share your social media posts & blogs are still actively engaging with your products. It is what individuals who want loyalty programs expect.
4. Offer a Variety of Rewards
Don’t be stuck to discounts. There are other ways through which you can reward your customers.
Customers who earn a certain number of points can be given a choice to use them as free tickets for entertainment. Another brilliant idea is to give them a choice to donate money in their name to charity organizations.
5. Make “Points” Valuable.
Customers need clarity. No one wants to enroll on points without understanding what they are getting in return. You, therefore, have to make their points count if you are encouraging them to enroll.
Give them an idea of what they expect to win so that they can have it in mind. They can also estimate what they get if they continue shopping with you.
6. Corporate Social Responsibility (CSR)
Don’t monetize all the customer rewards. Instead, find ways to participate in activities that improve the well-being of the community.
Many consumers are loyal to certain brands simply because they share the same beliefs with them.
For example, if you are a flour processing company, you could donate a kilogram of the flour every time a customer buys five kilograms.
Knowing that they make a positive impact by choosing your brand is a motivating factor.
7. Create Many Opportunities for Clients to Enroll
After launching your loyalty program, do everything to ensure that you let your clients know about it. Grab any small window you get.
For instance, if you are selling your products online, indicate the number of points a customer would earn if they bought the item.
You can also set an on-site push notification when a client does an activity that earns them points.
You go the extra mile and advertise the offer on social media platforms.
8. Partner with Other Firms to Create Compelling Offers
The bigger and more valuable the offer is, the better. You can, therefore, seek partnerships to enrich your loyal customers.
This is also a way to reach other potential customers.
For example, a boutique selling baby clothes can partner with a diaper company because they are both targeting the same audience. By so doing, both, can reach a larger market.
9. Gamify Your Customer Loyalty Program
Everyone loves games because of the feeling that comes with winning. It is, therefore, advisable to give your program the winning spirit aspect.
Find a way for clients to showcase their wins and rewards. This will encourage them to continue engaging with your brand as well as motivate others to do the same.
Customer Loyalty Programs for Small Business
A small business may not have the same strength as that of large organizations to big loyalty programs.
However, there are still ideas on loyalty programs that are easy for small businesses. Read on to learn a few.
1. Punch Cards
This is one loyalty program that is popular in small businesses. Clients are offered a credit card which is punched every time they buy something. They are then rewarded after their card has a certain number of holes.
At least through this program, the business only spends on the customers who buy a certain times, and they are assured of them coming back.
2. Opt-in Email
Opt-in- email asks the customers to provide their email. The business can then use email to promote their products. Composing emails is easy and cheap.
Another option is to purchase an email automation tool to send emails to many people at the same time.
3. Free Trials
This is mostly seen as an incentive to convert potential leads to customers. What many entrepreneurs don’t know is that they can be used as rewards. For example, if you are launching a new service or product, you can provide customers with loyalty programs to test instead of giving them out randomly. This serves as both a marketing strategy as well as a loyalty reward.
4. Partner Programs
The other way of coming up with a valid loyalty program is joining hands with other small businesses.
By combining resources, you can come up with great programs that can benefit all three parties, you, the other firm and all customers.
Try focusing on non-competitive organizations to incline the odds to your favor.
5. Referral Program
Your customers can help you capture leads. Many customers are willing to refer their friends and relatives to your firm if you have nice offers. You can offer incentives to loyal clients who give you referrals as a reward.
This will definitely motivate them to refer other customers.
One Final Word
If you want your business to be successful, you must be able to keep up with what your competitors are doing.
There is almost a substitute for every product, so the way you differentiate your brand from your competitors plays a huge role in your sales.
One of the things you cannot afford to ignore is the customer loyalty programs. Whether you are a big corporation or a small business, you have to sacrifice and have a loyalty program.
Customers love firms that value their loyalty and are encouraged to purchase more items.
They also love to shop with companies that take part in CSR as they feel like they share the same beliefs.
It doesn’t matter how small your customer loyalty program is, as long as it is there you are good to go.
Good luck retaining your loyal customers!
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