Why your business needs a loyalty program
5.5 billion dollars. That’s how much the global customer loyalty market is worth. And it’s expected to surpass 24 billion by 2028.
As global brands compete for customer attention, they are turning to rewards.
If you haven’t considered the impact of loyal customers on your business, don’t get left behind. Increasing your retention rates by just 5% can increase your profits by 25-95%.
It also costs 5x more to acquire new customers than it does to retain existing ones. So, for 2 brands with the same revenue, the one that focuses on selling to repeat customers will make significantly more money.
Rewards programs ultimately help businesses become the brand of choice. It’s no secret that the current economic climate is putting pressure on everyone. While this may seem like a tough time to make investments, it actually presents an opportunity.
The cost of living crisis means customers are looking for brands that offer them a value-added experience. Value doesn’t necessarily mean discounted prices - value can come in the form of rewards.
A loyalty program is vital for businesses that want to keep customers from switching to competitors. With rising costs, you may not be able to compete on price - but you can compete with the experience you offer your customers.
Let’s take a more detailed look at the reasons why so many businesses are investing in loyalty programs this year…
#1 Rewards help brands retain customers by building closer relationships
One key benefit of offering rewards to customers is retention. When customers feel like they’re being treated well, they’re more likely to stay.
It all comes down to building closer relationships. Brands that use loyalty programs to understand customers and offer them valuable rewards will stand out from competitors.
With the right software, you can reward any kind of customer activity. That means you can drive whatever behaviour you want to see more of. For example, if your business is trying to increase online engagement, reward customers who share your product on social media. Improve retention rates by offering unique experiences for loyal customers, like VIP access to events. Or, keep things simple and give your customers points when they purchase with you. Points can be redeemed for personalised reward experiences.
Whatever reward mechanics you choose, loyalty programs bring you closer to the customers that matter most.
Check these ideas out
#2 Increase customer engagement and referrals
Loyalty programs are a powerful way to improve engagement rates.
Every day, you have an opportunity to impress your customers. They may have purchased from your brand before, but they don’t engage with you much. And sometimes they want to engage with you - but you don’t give them the opportunity to.
The best way to ensure that people continue to engage with your brand is through a loyalty program. This way, you can keep them informed about your brand, while also rewarding them for engaging with you in new ways.
Higher engagement also leads to more referrals. When a customer is excited about your brand and the rewards you offer, they will tell their family and friends.
Referrals can also drive more revenue because referred customers tend to be more involved with your brand than non-referred ones.
Increase engagement by combining gamification with incentives that are tied to specific customer activities rather than just money spent. For example, you could create a leaderboard showcasing which customers have collected the most points. Then, offer an exclusive reward to your most engaged customers.
The definitive guide to loyalty strategy
#3 New customer acquisition
Although it might seem contradictory, a loyalty program can also be a great acquisition tool!
With rewards, you increase the value of your product or service. The incentives you offer can make new customers feel like they’re getting something for free - which gives your brand an increased sense of value. Plus, in a world where consumers can get the same product or service from lots of different brands, it’s the extra details that can win you a new customer.
Rewards also give customers a reason to switch to your brand…
It all comes down to one thing: you’re giving something back. And when customers get more in return for their purchases, they have a reason to choose you over anyone else.
#4 A deeper understanding of customer data
Loyalty programs are an increasingly popular way for brands to get a deeper understanding of their customers. By collecting first-party data, loyalty programs can help brands understand their customer's behaviours and preferences in a way that they can't on their own.
First, by collecting data from loyal customers, brands gain insights into what motivates them. This allows them to create more targeted messaging, which is critical for any business looking to launch effective campaigns.
Second, collecting first-party data means you're not just capturing data about your customers' purchase history—you're also capturing information about their behaviour across different channels and devices. This means that rather than focusing on how many times someone has purchased something from your website or app, you can get a better sense of what they're doing online and offline as well as how they interact across your entire business.
Rewards programs offer an insightful way to track customer activity. When you can see how, where and when your customers are purchasing products, you can figure out ways to make their experience with you even better.
#5 Drive the behaviours you want to see
Rewards are a great way to incentivise customers to perform any activity a brand wants to see more of. This is because the reward can be tailored to the customer and their needs, which means that it will be specifically motivating for them. The more tailored the reward, the better.
We help you go beyond transactions, to make any customer action or behaviour rewardable using our event-based technology. Configure the rules of your white label loyalty program to reward any kind of customer action or behaviour with points, rewards, discounts and more.
Loyalty programs are one of the most powerful tools for driving customer retention and loyalty.
Creating a loyalty program can be a significant investment. However, the results are well worth the effort. Not only do loyalty programs help build better customer relationships, but they also lead to increased revenue and conversions. For those reasons and more, it's well worth the investment for brands to offer their customers the opportunity to earn rewards. By improving your customer relationships and increasing customer retention, you'll be able to weather a down economy much more easily than if you didn't have a loyalty program in place.
That’s why it’s so important to invest in a loyalty program. So, what are you waiting for?
To learn more about what it takes to create an effective loyalty program, you can learn more by visiting the resources listed below.
Loyalty programs 101 - everything you need to know
What do the best loyalty programs have in common? Get some inspiration
A complete guide to loyalty programs in 2022
The definitive guide to loyalty strategy - find out which loyalty strategy is best for you
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Creative & Content Marketing Executive
Helen is our Creative & Content Marketing Executive. She shares valuable information about the Future of Loyalty and will keep you up to date on the latest industry insights...