Customer loyalty is crucial to the sustainable growth of every business. It may be hard to come by, yet it's not impossible to achieve and sustain. As an entrepreneur, your mission is to keep consumers returning for a good reason. Thus, meet and exceed their expectations not only through quality products and services but also through a seamless customer experience. Moreover, you can execute enticing loyalty programs to reward them for their constant patronage.
What is a Loyalty Program?
A loyalty program is an initiative businesses implement to retain customers and establish loyalty. It’s a retention strategy designed to incentivize repeat patrons. With a loyalty program, when a customer spends money with a store, they receive rewards, discounts, points, or other incentives to encourage them to come back and shop again.
5 Benefits of Loyalty Programs
There are different types of loyalty programs, but one thing remains the same: They keep shoppers coming back for more! Here are a few specific benefits.
1. Loyalty Programs Improve Customer Retention
Customer retention measures a company's ability to keep the same customers over time. A high customer retention rate means that many choose to repeatedly pay for your offerings and deepen their relationship with you.
There are several customer retention techniques you can try, loyalty programs included. In a 2020 survey, 68% of the participants expressed their willingness to enroll in programs managed by businesses they are fond of, a 59.8% increase from 2019. Whether a point-based, value-based, or fee-based system, a well-executed reward program can help retain customers.
The most innovative loyalty programs allow customers to earn gifts, points, cashback, and freebies simply by sharing social media posts and posting reviews. Apart from the loyalty of existing customers, this strategy also leads to more user-generated content, contributing to increased brand awareness and sales.
2. They Increase Sales
The happier and more satisfied consumers are, the more they pay and leverage your loyalty program benefits. Adding more value can even encourage more significant, frequent purchases. In fact, a 5% improvement in customer retention equates to a 25% to 95% profit increase.
Tiered loyalty programs are some of the most popular and profitable initiatives implemented by big brands. A good example of a loyalty program is Sephora's Beauty Insider, which offers exclusive deals, in-store beauty tutorials, and limited edition products. The company attributes 80% of the brand’s sales to the members of this three-tiered point rewards system.
You can learn a lot from this initiative, even as a small business owner. First, listen to what your customers want. Then, provide interesting perks, upgrades, multiple payment options, and most importantly, personalized services for more repeat business.
3. They Strengthen Customer Relationships
Loyalty programs, a great consumer data source, help us understand consumer preferences and behavior more. Once people enroll in your program, you gain access to their interests, location, and other personal details. These can help you tailor your offerings to better satisfy their preferences and appeal to their emotions.
Apart from addressing customers by name and sharing recommendations, use their information to build a long-term relationship with them. Enhance customer experience through tailored messaging and interactions. For example, share personalized emails, newsletters, opt-in forms, and promotions.
Interact with them in real-time through your website live chat or social media apps. Ask for feedback and offer personalized solutions. Tell them their reviews and feedback matter and that you’re there whenever you need them.
4. Loyalty Programs Promote Your Brand
When people are happy and satisfied with your services and loyalty program, they’re more likely to share those positive feelings with those around them. A brilliant loyalty program may increase brand awareness through social media and word-of-mouth marketing.
Give loyalty points for every referral. Refer-a-friend programs won't only introduce new customers. They also nurture your relationships with current patrons, turning them into brand advocates who connect your brand to more people.
You can spread the good word about your business by promoting your loyalty program in your blog, social media platforms, direct mail campaigns, and in-store marketing efforts. When done correctly, these strategies may eventually result in more referrals and higher profit.
5. They Eliminate Price Competition
Setting yourself apart from your competitors isn’t easy. Fortunately, it’s possible to compete with other businesses in many ways, not just in price alone. Purchasing decisions are influenced by many factors, such as perceived value and recommendations.
Reducing costs will always be an option to drive more sales, but there’s another thing you can do to give your business a competitive advantage without losing money. A loyalty program can provide customers with greater value without reducing prices.
It functions as a powerful differentiator that constantly retains customers and satisfies their demands. Find a fun, meaningful way to reward them and deepen your relationship with them, so they’ll choose your products and services instead of another company’s, even at a similar price point.
Roll Out a Customer Loyalty Program That Works
Building and monitoring a loyalty program is a time-consuming process many businesses fail to execute. Unfortunately, setting up the system alone can be too complicated for companies that require immediate improvements. This is where having the right technology can prove to be your greatest ally.
Our team at True POS can help you run a high-performing loyalty program and provide customized rewards to your returning customers. Contact us for a free quote today and ask us how we can help you set up a loyalty program that delivers real results.