Rewarding customers certainly benefits them, but are you really getting anything in exchange for your company? For the past couple of years, the customer loyalty program has been given new recognition. Firstly, because the customer loyalty management system has tons of benefits, and secondly, it adds value to the overall customer experience.
However, in today’s market, just having a traditional loyalty management system is not enough. You must add enough value that it improves the overall ROI and customer retention for your brand.
This demands careful planning, a personalized experience, and user-generated content that builds trust among the customers.
Before moving forward to the benefits let’s begin by analyzing the scope of the loyalty program.
Scope of Customer Loyalty Programs
A study done by Rare Consulting revealed that 83% of the customers that have used a loyalty management program continue to do business with the company.
In a highly competitive market where customers can switch in a blink of an eye, customer loyalty programs are able to retain customers. When customers are ready to make that switch, the loyalty management system helps them stay with the brand.
The Importance of Loyalty Management Program For Small Businesses
61% of the retail brands label customer retention as their major concern. But 67% of customers spend more with a sustained loyalty system in place. In reality, a loyalty management program is not a short-term solution, it’s a long-haul customer experience that entices customers to stay more loyal as time goes by.
Do loyalty programs really increase sales? Yes. When customers become loyal to your mind, there is a higher chance that they are more likely to buy from you and spend more on each transaction. Did you know that mere customer retention of 5% can improve your profit by 25%?
Loyalty systems are a proven way to give incentive to customers which gives them an opportunity to choose you over competitors.
A well-designed loyalty management system can give your business a positive impact and improve customer’s trust.
Let’s look at the various benefits that business owners can get from a loyalty management program.
1. Rise In Sales
Customer retention increases sales because loyal customers already trust the brand and they are more likely to buy from you. As mentioned above a mere 5% customer retention can boost the profit by 25 to 95%.
Acquiring new customers is 7 times more expensive than selling to existing customers. With a loyalty management system, you’ll be able to resell to the existing customers because they already trust your brand and just need a little push to buy from you, saving you customer acquisition cost.
3. Data Collection For Enhanced Customer Experience
Modern-day consumers prefer a personalized experience. With a loyalty program in the palace, you’ll be able to gather data regarding customer habits and patterns. With the data, it will be easy to create a customized experience for every customer. Moreover, you’ll be able to create targeted marketing campaigns, improve the bond with customers and implement your referral system.
4. Customer Satisfaction
When you give customers a customized shopping experience, they’ll form a special emotional bond with your brand. Doing so will increase customer patience in case something goes south.
A surprise and delight reward or point program can increase appreciation by recognizing on special occasions.
5. Measuring Loyalty Through Engagement
You can use program data to measure your customer loyalty’s effectiveness and view reports. Tracking retention metrics like engagement, a customer’s repeat purchase frequency, and program engagement.
6. Improved Customer Communication
In an emergency, such as a recall, loyalty programs offer a direct way to communicate with customers. When you match purchase dates, it will be easier to contact relevant customers if a product is recalled, rather than sending a general message that will probably get ignored.
Your loyalty program can also be used to increase sales, promote special events, and showcase new products.
7. Attracting New Customers
Through rewards programs, new customers can be attracted in a variety of ways. You will be able to automatically subscribe new customers to your mailing list if you offer points or discounts in return for signups.
A customer is more likely to try your brand if they see that there is a good loyalty program that rewards them easily.
Additionally, satisfied customers may recommend your brand to their friends without any referral program. In order to further increase referrals and attract new customers, you can also integrate your loyalty and referral program into an omnichannel platform.
8. Impact of Customer Loyalty
In order to run a successful business, loyalty to customers is crucial. Customer satisfaction leads to more repeat business, greater spending, lower volatility, and more brand advocates.
The cost of acquiring a new customer tends to be higher than retaining a loyal, repeat customer. A successful business depends on retaining customers.
A loyalty program does require some work and planning, but it is well worth the time and effort and provides a measure of future business success. If you need a loyalty management system tailored to your needs, our software development experts are happy to help.