The Yotpo survey on American shoppers’ attitudes towards customer loyalty in 2018 found that over 52% of loyal customers are ready to join a loyalty program if one is offered to them.
The Loyalty Report 2018 by Bond Brand Loyalty also revealed that consumers spend 37% more with brands when they are a loyalty program member, while 37% are even willing to pay a fee for access to enhanced loyalty program benefits.
A customer loyalty program is a marketing tactic. It is used by companies to encourage repeat customers to purchase more by offering them certain benefits and rewards. Those benefits may vary from discounts or free products to any other perks that are valuable to customers. An effective loyalty program for rewarding customers basically fulfills three basic marketing goals and objectives:
Apart from increased customer retention and boosted profits; offering reward programs for customers results in a number of other benefits for businesses. With the right strategy, these benefits enable businesses; build a deeper emotional connection with existing customers, drive more meaningful customer engagement, and even create brand advocates.
Moreover, they also allow gathering valuable customer data that can be further used for personalizing customer experiences. Thus, creating targeted marketing campaigns. Implementing a loyalty program is an investment. It helps businesses to actually save money since retention strategies are usually less expensive than attracting new customers. You can find different types of loyalty programs down below.
The right customer loyalty program design is mission critical. Below are 6 important aspects to consider when creating a loyalty program to ensure its success and profitability.
The first step in rolling out an effective customer loyalty program is researching your existing customers. This gives you a clear understanding of which customers to target and determine their motivations to join a loyalty program.
According to the 2019 Loyalty Barometer Report by HelloWorld, from a rewards perspective;
Moreover, choose the right types of incentives that are most relevant to your customers.
The more complex the loyalty program is – the harder it is to encourage customers to enroll. The 2017 COLLOQUY Loyalty Census research revealed; ease of use is the main reason for participating in a loyalty program for 53% of U.S. consumers. Among other reasons, “easy to understand” was cited by 37% of respondents.
The 2018 Loyalty Program Consumer Survey by CodeBroker reported; nearly 75% of consumers would actively engage with loyalty programs if they could access their rewards information from their smartphones. It also found that;
As stated in the Loyalty Report 2018 by Bond Brand Loyalty; to ensure customer loyalty program success, the following TOP four pitfalls and sources of member frustration should be avoided:
Make sure the loyalty program offers rewards that are not only valuable for customers but are also easily attainable over a reasonable period of time. According to 2017 COLLOQUY Loyalty Census research and 2019 Loyalty Barometer Report by HelloWorld cited;
These were the most common reasons for abandoning a customer loyalty program.
When rolling out a loyalty program, there are a few important metrics to consider to measure its overall effectiveness. Such as customer retention rate, customer churn rate, Net Promoter Score, and Customer Effort Score. For example, if a loyalty program is successful; the customer retention rate should increase over time as more members join the program. If the numbers are not satisfactory, be ready to make the necessary changes. The changes are based on how the program is performing and how the customers are responding to it.
We have already mentioned the great benefits of having a customer loyalty program. Every company can leverage these programs, even a small business. The ROI is customer retention, customer awareness, referrals, and more. Don’t sleep on this opportunity and pick a budget-friendly loyalty program for your business.
Customer loyalty programs for small businesses might differ from industry to industry. However, it does not always mean that one is better than the other.
If you would like to learn more, check out our in-depth Customer appreciation article.
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