Over the past year, the term business as usual has lost almost all meaning. It is no secret that COVID-19 has disrupted most of our lives, exposing brands’ vulnerabilities, shutting down stores, and throwing the customer experience into mayhem.
But more than anything, exposing the flaws in our systems has shown us what brands can do to improve their business models for the future. With the loss of the in-store customer experience over the past few months came a need for a new method of interpersonal communication between brands and customers, and what better way to do it than with a loyalty program?
What is a loyalty program?
At the base of it, a loyalty program is made to incentivize the user and reward their spending with a points or returns system. If we look at it a little deeper, this is actually a brilliant way to connect with the customer on a personal level through developing a direct line of communication with them and making them feel that their purchases are valuable.
In 2021, it was revealed that consumers who participate in high-performing loyalty programs are 80% more likely to choose this brand over other competitors, and are twice as likely to recommend the brand to their friends. Seeing as the numbers are looking good, let’s look at the actual benefits of launching a loyalty program.
The benefits of a loyalty program
1. Familiarizing yourself with your consumer base
A loyalty program provides brands with invaluable data on customers’ shopping patterns that would be far more difficult to collect any other way. Things such as repurchase rate, product engagement, product preferences, could all become readily available data if you choose to launch a loyalty program.
By familiarizing yourself with your customers’ shopping habits you will then be able to develop a direct line of communication with them.
The formula is simple: the more customers feel understood and cared for, the more likely they are to return, and during times of uncertainty, this will help retain your consumer base.
This is the first step towards building an interpersonal relationship with each client, and during times of crisis, you’ll be thankful you choose to do it.
2. Solidifying your customer base
Research shows that you are 60 to 70% more likely to sell to existing customers than you are to new customers (5 – 20% probability).
With the current uncertainty that we are facing, especially with COVID-19, it is essential for brands to rely on their existing consumer base in order to minimize losses and retain profit.
3. Cost-Efficient Budgeting
Loyalty programs can bring you invaluable data every time you run a campaign. A data-driven loyalty program can help you track your acquisition channels (both offline and digitally. Being able to visualize your customer’s journey in real-time will give you the information to predict which channels are cost-efficient for the brand, and which aren’t. Launching a retargeting campaign based on data will also help you boost your retention rate, which is key if you want to reduce costs on acquisition.
4. Word-of-mouth marketing
Not only do loyalty programs build you a solid customer base, but they are also a great cost-efficient way to market your brand to others.
Happy customers are more likely to tell their friends, family, and colleagues what a wonderful brand you have if you keep them satisfied! A loyalty program that rewards customers for their purchases will surely increase customer retention and increase referrals.
5. Repeat purchases
A great loyalty program could be the thing that sets you apart from your competitors. An incredible rewards system, efficient customer service, a tailored user interface, and constant follow-up are some of the few factors that could keep your customers coming back for more!
Ready to launch your first loyalty campaign & start connecting with your clients?
Talk with one of your loyalty experts to take you in the right direction!