Customer loyalty programs are a great way to reward your most loyal customers, the lifeblood of every sustainable business. The statistics vary depending on the source, but it’s safe to say that it costs less to engage existing customers than to acquire new ones, making a customer loyalty program an excellent retention tool for your business. A customer loyalty program can also increase brand awareness.
In addition to rewarding customers, loyalty programs can also provide you with great consumer insights and data. Typically, customers join loyalty programs by submitting their details and contact information. Then they’re usually assigned a unique code or membership ID with which they can claim their rewards.
How Effective Are Customer Loyalty Programs?
According to a report by Accenture, more than 90 percent of companies run one or more customer loyalty programs at any given time. They’re popular, but are they effective? According to studies, the answer is yes!
- As many as 75 percent of consumers say they’ll readily make another purchase if they get a reward for buying from a brand.
- Less than 8 percent of consumers say rewards don’t influence their buying decisions.
- As many as 73 percent of consumers are willing to recommend brands with a good loyalty program.
- Including a loyalty program can potentially increase your online store’s average order value by 319 percent.
The Benefits of a Customer Loyalty Program
A customer loyalty program has multiple benefits, including:
- Helping you develop strong relationships with your customers
- Improving customer satisfaction
- Encouraging existing customers to recommend your business
- Increasing sales for your business
- Showing your customers gratitude for their business
Developing a customer loyalty program has the power to make a significant impact on your bottom line. Implementing the right loyalty program for your customers and managing it well can ensure long-lasting success for your business. Keep reading to learn how to develop a successful customer loyalty program.
Developing a Customer Loyalty Program
Do Your Research
To execute a successful customer loyalty program, you and your team need to conduct research before implementing your program. Although there are various ways to build customer loyalty, research will help you choose the best fit for your business.
Start with a clear understanding of the objective of your program. Then analyze the nature and size of your business and create a program that helps you accomplish your business goals. Remember to consider customer expectations, behavior, and current market trends.
You can collect customer data from various sources, including your website analytics, inventory history, sales, conversations, etc. The idea is to use the information to understand customer behavior, which will reveal the types of programs that will interest your customers.
Keep It Simple
Don’t overthink or overcomplicate your loyalty rewards program. If it’s too complicated, customers won’t understand it. So instead, make it easy to comprehend with a simple sign-up process. In addition, make sure the system for earning points is easy to track. Be sure to explain how customers can redeem points and if there’s an expiration date.
Make Your Rewards Customer-Centric
The rewards you provide should make financial sense for your business and simultaneously offer something your customers want. Your loyalty rewards must appeal to your customers to ensure success. It won’t work if you’re using it to unload extra inventory. Instead, analyze your customers’ unique needs and buying behaviors and use this information to decide what rewards to offer.
Although there are many possibilities—discounts on repeat purchases, free rewards, or a combination of the two—always remember the most important rule: The rewards have to offer value to the customer.
Set and Track Goals
Setting goals will help provide valuable information about which rewards work and which ones don’t. It also allows you to track the general performance of your loyalty program. Plus, it helps you know if it impacts your bottom line positively.
It’s equally important to track your goals. Important metrics to measure are customer retention rates, conversion rate, churn rate, and net promoter score (the degree to which people are likely to recommend your business to their peers).
Marketing Your Customer Loyalty Program
Even if you have the best customer loyalty program, it won’t work unless your customers know about it. So, invest in a marketing strategy that fits your business to make your customers aware of the program. Here are a few suggestions:
- Online Ads
- Social Media
- Press Releases
- Newspaper Ads
- Outdoor hoardings
- In-store signage
- Send out a customer satisfaction survey
- Send an email newsletter
- Develop a customer referral program
- Hold an online contest
- Publish distributed content
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