Nowadays, every business that aspires to attract repeat customers will want to consider implementing a loyalty program. These schemes help to incentivize your customers to come back again and again – and they often yield substantial results with just a little bit of investment. According to Frederick Reichheld, the inventor of the net promoter score, increasing customer retention by 5% can lead to an increase in profits of up to 95%. A loyalty program can help to achieve this result – and it can confer several other substantial benefits, too.
De-escalate the price war
Thanks to modern online innovations like Google shopping, customers can more easily compare the price of a given item than ever before. As such, online businesses who rely on matching the lowest competitor might find themselves unable to compete. Studies into purchasing decisions indicate that they’re surprisingly emotional – thus forging an emotional bond with your would-be customers can drive repeat purchases more reliably than cold hard figures ever could.
Retain existing customers
It’s an old adage that it’s easier to lose a customer than it is to gain a new one. But that doesn’t make it any less true. Moreover, loyal customers tend to spend more than new ones – by as much as 67%. LoyaltyLion’s data suggests that order numbers from signed-up customers were higher after the lockdown than before it, which suggests that repeat customers help to drive business growth.
Increase the customer lifetime value
Among the more important metrics to concern yourself with is the CLV, or customer lifetime value – the amount that a customer contributes to your business over their entire lifespan. Through software from LoyaltyLion, among others, it’s now possible to accurately estimate how much each of your customer is worth. This information could be critical to the long-term prosperity of your business.
Build personal relationships
When tailored correspondence arrives in your email inbox, it tends to connect that much more than one-size-fits-all promotional material. Bespoke email is more likely to be opened, and it will help to forget the emotional bond whose importance we’ve already looked at. According to LoyaltyLion, providing a unique, tailored service will “stop your customers from feeling invisible and start feeling valued. With it, you’ll start to realize the longer-term benefits of their loyalty to you.”
Create brand advocates
A happy customer won’t just come back to your business again and again; they’ll also spread the good word about your brand to their friends, family and colleague, thereby doing your marketing work for you. If you earn the affection of those people, too, then your reputation will grow exponentially. Loyalty programs therefore have a self-sustaining positive effect.
