29 Jul Importance of Loyalty Programs
How to keep customers, and retain bottom line profitable
It costs a business five to ten time more to acquire a new customer than it does to sell to an existing one. But not only that, current customers spend on avarage 67% more than new customers. Following this statistics, business must think about strategy which will keep customers coming back. Loyalty program can be a great way to express that you value your customers and that you want to encourage them to stay engaged with your brand.
It has been proven that loyalty programs boost the growth, and almost in every industry leads to success. Also the “growth hacker” movement whose sole aim is the growth of the company, began by using loyalty programs as their traditional model to expand a company. They also find it as one of the easiest way to ensure the positive outcome.
What is a loyalty program
A loyalty program is a rewards program offered by a company to customers who frequently make purchases. A loyalty program may give a customer free merchandise, rewards, coupons, discounts… And while every company can offer promotional coupons and discount codes, businesses that can provide value to the customer in ways other than money saving have an opportunity to really connect with their audience. Before you get started, make sure your goals are clear and you’re doing it for the right reasons. If you design a customer loyalty program around discounts, you’ll attract discount seekers only, and your program will more than likely fail.
Any loyalty program has to focus on enhancing the customer’s experience and on addressing their needs. Loyalty programs should always go in two ways; motivate new clients to stick around after purchasing your goods and services, and ensure that existing loyal clients still feel as if they are valued by your operation.
The rewards can be applied to purchases made online, in person, or both. It’s important for business owners to keep in mind that customer loyalty isn’t just for big businesses, programs can help any size business to reach new heights.
The different types of customer loyalty programs
Loyalty point programs let customers accumulate points that they can redeem for rewards or free products or services. They’re so easy to set up that 73% of loyalty programs are points based, making this the most popular type of loyalty program. In this case not all points are tied to money transactions. Some may be earned from social sharing, emails, or other actions customers take to drive traffic to your site. It is not good that loyalty programs depend only on transactions.
In spend programs customers get loyalty credit for the amount they spend at business. This kind of program is very easy to understand, create, and maintain. They’re an effective way to cut your churn rate and increase transaction amounts.
An improved version of points programs, tiered loyalty programs give customers rewards based on different levels of spending or points. They are growing quickly in popularity because they can be highly targeted and customized easily. In some tiered programs, customers are offered gifts, free products or services, privileges, or exclusive products.
Paid loyalty programs provide an exclusive feel by incorporating a monthly or yearly fee that members pay for access to special services, discounts, or unique opportunities.
Simplicity is the key of any loyalty program
Launching a reward program is an important step in growing your business, but when implementing it you have to keep in mind some basic rules. If your program is a hassle to use or difficult to understand, it won’t be used.
Start with your existing mailing list. You already have loyal customers. They like you enough to join your mailing list. Use that to your advantage and make them feel special at the same time by offering them a chance to be the first members of your loyalty program. You also have to make it easy to join, and ask only for the information you really need, no one wants to share their life story with the computer. Ask for an email, name and birthday (if you offer something special for their celebration). Another rule is to make earning rules simple because if no one understands how to earn in your program they may ignore it.
The simpler the rules are, the more likely your customers are to actively try to earn. Spending rules also have to be simple, and customers must not jump through hoops to spend. You focused on simplicity for the customer. Don’t forget simplicity for you too. Automation can reduce the work process while helping your customers to feel appreciated and in touch with your business. And above all keep your rewards transparent, worthwhile for your customer, and easy to use or acquire. Important step is also the promotion of your loyalty club. You can do that via email, social media, or your website. The best strategy is to combine the three.
Make positive brand awareness
No matter how you shape your loyalty program, make it about your customers, not about your brand. Find out what matters to them and weave it into your program. It is a chance to make them feel appreciated and part of a caring community that is worth sharing and talking about. If you’re only thinking about earning on your end you’ll miss the mark and you might destroy your credibility. People crave a personal connection, and feel secure if they have a customer service able to respond in a short and reliable way.
The most important thing is that the loyalty program has to follow your business plan from the beginning of your business story. Its mission is to keep your customers, and your bottom line profitable.
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