Customer loyalty is essential to every business. In a long run, loyal customers are more profitable customers. Increasing your customer retention rate by just 5% can boost your profits by as much as 95%. However, business commonly focus on attracting new customers instead of looking after existing ones. While growing your customer base is very important, business owners need to consider how they can keep hold of the people who are more likely to buy from them again.
t is also important to mention that having loyal customers can be difficult in this day and age. Modern consumers have a wide range of choices and make decisions based on their most refined preferences. How to attract new buyers and turn them into loyal customers? Loyalty schemes are the answer. Today we will discuss powerful benefits of loyalty programmes.
1. Customer retention
The primary reason behind a loyalty scheme is to retain customers by rewarding them for their repeat purchase behaviour. A loyalty scheme’s imperative purpose is to give customers a good reason to buy again from the business. Repeated purchases lead to establishing certain habits which turn out significantly profitable.
Businesses with strong customer loyalty programmes grow revenues 2.5 times faster than their competitors. They also generate 100-400% higher returns to shareholders. Additionally, members of a business’ loyalty scheme of are 77% more likely to buy from that brand over competitors and spend 67% more than new customers. Moreover, 77% participants of a customer research said that they have been loyal to a brand for 10 or more years.
These numbers make customer retention an essential part of every business’ strategy. While investing in customer retention is 5 – 25 times cheaper than acquiring new ones, successful recruitment of loyal customers creates substantial steady income.
2. Creating brand advocates
Loyal customers’ importance does not lay solely in their purchases. Customers loyal to your brand can not only spend money but also generate it by becoming brand advocates. Brand advocates will refer your store to their friends, family and followers on social media. They will be happy to endorse your brand and more likely to share a testimony online.
Word of mouth is a key factor influencing purchase decisions. Almost 90% of customers report that word of mouth is the primary reason behind their buying decision. According to the story, 9 out of 10 online customers prefer recommendations from their friends and family over paid advertisement.
Additionally, in the current digital era, brand advocates tend to significantly contribute to creating a brand community. A community of people enjoying your brand’s products and values supports building brand trust and awareness.
3. Finding a way around price competition
Today, it is easy for customers to compare hundreds of prices in just a few clicks. If they are just thinking about the products you sell instead of your business as a whole, you might find yourself in a pricing race to the bottom. And it’s those large stores such as Amazon who will win in the end. This is why companies and, in particular, small and medium businesses, need to consider one of the biggest benefits of loyalty programmes: something that a price cannot promise. A loyalty programme gives you a way to stand your business and your brand apart by offering a much more enhanced and personal customer experience by connecting with their emotions.
Studies show that the decision to make a purchase is a highly emotional one. If you sell products that people buy through desire and not necessity, it’s important to appeal to their emotions. A loyalty scheme can surprise and please those who shop with you by rewarding them for something that previously went unnoticed. As a consequence, your customers’ decision on where to shop will not solely depend on who sells cheaper products; benefits of your loyalty scheme and your customer community will become imperative factors in their decision making process.
4. Providing vital market research
Offering a loyalty rewards programme is a form of conducting market research on your customers data. Through trial and error, you will begin to see factors that fuel the desire of your customers and what parts of your current strategy might not be getting sufficient results.
There are many ways of acquiring market information on your customers; these include encouraging your customers to filling in profiles on your website and measuring what rewards or benefits of your loyalty programme are most popular. Ultimately, understanding the purchasing behaviour is one of the most valuable information marketers may have. Efficient market research will help you identify most optimal buying behaviours and, therefore, create targeted marketing campaigns and personalise your customers’ experience.
5. Improved customer communication
Loyalty programmes give you a direct way to communicate with and to customers. You can use these to promote sales, special events, and showcase new products. You can also use a loyalty programme to communicate with your customers via surveys and interactive pools.
Additionally, giving out rewards or points for referrals, reviews and shares will not only increase your customer engagement but also become a way of expanding your audience and creating brand awareness.
6. New growth opportunities
Even though a good loyalty programme is fairly self-sufficient, it does not stop you from changing and improving your scheme over time. You can incorporate even more marketing aspects, including referral marketing and visual commerce. For example, if you want to run a campaign and need a stock of customer photos featuring your new products, your loyal customers will be your go-to source.
Creating a comprehensive loyalty programme that allows for modern marketing techniques, you can turn your scheme into a powerful resource opening doors to online giveaways, viral marketing campaigns and widening your market reach.
The 6 powerful benefits of loyalty programmes show the true importance of customer loyalty. The data and trends prove that implementing a loyalty scheme can be your way to increase sales, differentiate your brand and achieve a sustainable competitive advantage. Ultimately, if you are a small business owner, an expertly crafted loyalty programme can be the one factor that will make your customers choose your shop instead of bigger companies and corporations.
Knowing all the powerful benefits of loyalty programmes can be a beginning of a ground-breaking journey. If you are considering implementing a loyalty programme, we will be delighted to provide you with a strategy, structure and ongoing support to make it happen.
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