The purpose of the loyalty program is not only to retain customers or drive sales, but mainly to provide a great service experience to the customer. An experience that satisfies and is seen as special. This experience happening through the various incentives and rewards.
Loyalty initiatives also allow you to focus on your best customers and improve customer satisfaction levels. Loyal customers buy more and are often willing to pay more, which boosts your cash flow. By increasing loyalty, you can increase profitability and extend the time they place their business with you.(The Marketing Donut/Resources For Your Business)
According to Cardweb.com, customer spending is 46% higher with companies that offer rewards card programs. 28% of customers reported that they are 'Extremely Likely' to increase their visits to a business if they have a loyalty reward card for them. Over 60% of U.S. households said that loyalty card programs were important in their shopping decisions. Over three-quarters of the consumer population hold some form of loyalty or rewards card, while 25 % of the shopping population belongs to two or three programs.
Additional findings, from 'Getting a Business Lift From Loyalty' are:
- Participation in a rewards or loyalty program rose by 19% since 2007
- One-third of consumers find retail loyalty programs 'more important' when battling tough times
- About 75% of consumers said the economy had a positive or neutral influence on their decision to join a loyalty program.
- More than 46% of shoppers ages 18 to 25 said retail rewards were 'more important' during tough economic times, and 27% want to join more programs.
Ed Hadley, Senior Marketing Manager for Neolane, Inc., recommends 7 Loyalty program best practices for businesses:
- Make it easy for customers to redeem points/rewards. Once you eliminate redemption hurdles, you’re likely to discover a direct correlation between redemption and customer value.
- Solicit customer feedback on your loyalty program and improve it accordingly. Customers will be more engaged, and knowing that you listened will itself go a long way.
- Use your loyalty program to minimize churn threats. Let members redeem points for annual fees, often a big source of churn—or create 'spend and get' offers that offset fees.
- Collect customer data to increase relevancy. Encourage members to complete profiles; if you have to, give them with extra points. Use this data to generate targeted messages/offers.
- Use your loyalty program to differentiate your brand. Offer special, one-of-a-kind promotions and special events to differentiate yourself from more rigid competitors.
- Create an experience around redemption to lift engagement. Encourage submission and sharing of user-generated content (stories, pictures, etc.) relating to your loyalty program.
- Leverage your loyalty program as a platform to have relevant, meaningful conversations with customers. Create exemplary experience, and passionate brand advocates, with features, messages, and offers catered to their interests and needs.
Poor customer service is the aspect most likely to put people off from increasing their spend, followed by unachievable rewards, unrealistic points with expiry deadlines, or receiving too much communication.(Getting a Business Lift From Loyalty)
Loyal customers are good for your business because they become your best advocates. They recommend you to others, saving you marketing costs. A loyal customer's endorsement is more powerful to their friends and family than any advertising campaign.(The Marketing Donut/Resources For Your Business)
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