This article discusses what makes a good loyalty program and how it can boost your business’s revenue with good customer retention and advertising.
Customers are the driving force behind any company, but winning over their loyalty is not as cut and dry as it seems. Today, people “are making purchase decisions based on shared values, engagement, and emotional connection,”1 which means businesses must get creative on how they interact with consumers. A great way to do this is through a loyalty program that rewards customers for their repeat business with discounts, free perks, or special incentives. Each business is unique, so it is important to truly understand what your customers want and how that shifts over time. It might take a bit of finessing, but it’s worth it, because loyalty programs not only help maintain lifelong customers, but they also get new people excited to join in on the fun, bumping up your total revenue.
Now more than ever, customers are on the lookout for great loyalty programs from their favourite businesses. In a poll conducted by Yotpo, an ecommerce marketing program, “nearly 68% of respondents said they’d join a loyalty program for brands they like, while 56% of those are willing to spend more with a brand even if cheaper options exist.”2 However, haphazardly throwing a program together will not be enough to impress your customer base. To get optimal results, you must carefully consider the kinds of rewards or perks your customers want. Yotpo found that from 2019 to 2020, customers wanted more than just discounts and free shipping, and were instead looking for loyalty programs that gave them early access to sales (up 18.1%) and new products (up 20.5%).2 This significant shift is why it’s important to track what matters most to your customers, so you can provide incentives they will really get excited about and keep coming back for more.
While it’s true that in order to have a loyalty program you need to “give something up,” treating your loyal customers pays dividends. Many businesses devote a lot of time and energy trying to convert the general public into paying customers through extensive marketing but are weary about losing sales or product through rewards. What they don’t realize is that “acquiring a new customer is 5-25X more expensive than retaining a current one,”1 and their efforts could be better spent capitalizing on the consumer base they already have. Utilizing a loyalty program that connects with people “beyond… the point of purchase” makes them happy, creating better customer retention in the long run.1
The more lifetime customers you earn, the more likely friends and family will follow based on word-of-mouth alone, especially if the loyalty program is beneficial for all. As far as advertisements go, this is very profitable, because “customers referred by loyalty members have a 26% higher retention rate.”1 Businesses can even take this one step further by having their customer loyalty programs incentivize reviews, ratings, or social media posts to get “…customers singing [their] praises, so [they] don’t have to.”1
As online shopping numbers rise higher at every turn, user-generated content has become one of the most reliable forms of word-of-mouth advertising. Therefore, making a loyalty program that creates some buzz for your business in person or online is a wise choice.
These days, customer loyalty is built on more than just who has the best prices. When a company engages with their customers in a meaningful way, it helps create an emotional connection based on shared values. One way to create those essential relationships is by developing a loyalty program that understands what customers truly want, offering great perks and incentives as a result. Although businesses might worry that they are giving away too much, it is actually quite profitable to have a loyalty program. Not only does it create lifetime customers that are happy to spend their money at your establishment, but it also helps promote your business through word-of-mouth advertising, both in person and online.
Download this resource Loyalty Programs: Part 1 – Why Should You Have One?.
1 Bernazzani, Sophia. “The Beginner’s Guide to Building a Customer Loyalty Program.” Hubspot. https://blog.hubspot.com/service/customer-loyalty-program
2 Peacock, Lindsey. “Keep Them Coming Back: 7 Innovative Customer Loyalty Programs (And How to Start Yours).” Shopify. https://www.shopify.ca/blog/loyalty-program