The Customer Loyalty Craze
In today’s day and age, as a small to medium business owner you must ask yourself (and if you don’t, you should), what can you do to ensure that your customers keep coming back to you and how to attract new ones along the way? Is it possible to inspire that feeling of customer loyalty towards a brand and more importantly, if it is, why isn’t everyone doing it already?
For anyone who has ever heard of the Starbucks Rewards program or CVS ExtraCare Rewards, there is a good reason why you have (and if you haven’t, clearly something’s wrong). Larger retailers have already been doing it for years, spending lots of time and money to implement such programs. A Loyalty Program is a great marketing tool which can help increase growth, retain customers and also provide valuable customer insights. That being said, don’t let the sheer size of these propositions daunt you. Thankfully due to cutting edge technology, it has never been easier to implement one of your own such programs.
Here are a few good reasons why you should consider implementing your very own Loyalty Program:
THEY ACTUALLY WORK
There is actual evidence to prove that loyalty programs do provide results. Most businesses are ready to jump on the bandwagon for a reason, and nothing speaks more than $$ does. A study of U.S companies conducted by Experian Data showed that 69 percent of businesses that use loyalty programs could track each of their customer’s lifetime value. They found that those loyal customers spend over 10 times than a non-loyal customer would.
Another study by RJMetrics shows that the top 10% of your loyal customers spend 3x more than the remaining 90% while the top 1% spends 5x more! Furthermore, as seen in the picture below, businesses can increase their profits by up to 95% by just increasing their customer retention rates by as little as 5%. Nearly 83% of customers claim that they are more likely to do business with companies who have loyalty programs in place. So wouldn’t it be beneficial for your business to know who those loyal customers are and provide them with even more incentives?
SOURCE: FONOLO, 10 GO-TO TIPS FOR INCREASING CUSTOMER LOYALTY
GIVE YOUR CUSTOMERS A REASON TO KEEP COMING BACK
Studies have shown that customers who accumulate points on their rewards program, tend to keep coming back to stores to redeem them, which leads to further increased purchases and thus, the cycle continues. In most cases, saving money is the primary incentive (almost 60%) behind customers signing up for loyalty programs, but the use of loyalty programs also allows them to gain a sense of achievement by receiving and redeeming rewards they now feel entitled to.
SOURCE: TECHNOLOGY ADVICE, WHY CUSTOMERS PARTICIPATE IN LOYALTY PROGRAMS
INVOKE BRAND LOYALTY
Customers crave personalization. The more attached a customer is to a brand, the lesser are their chances of switching to another. Think Customer Experience. Businesses need to understand the emotions invoked within their customers which are what lead to the underlying sense of loyalty. Loyalty Programs tailored to their customers give them the sense of importance and exclusivity they innately wish for.
Why would someone come to your store if you offer the same thing as the store across the street? A good reason would be because you make them feel extra special. You give them more than just a product, you make them feel wanted. And who doesn’t want that? This is clearly seen from a study by Bain and Company, there exists an upwards of 70% chance of selling to an existing customer as compared to as low as a 5% chance of selling to a new one.
SOURCE: MARKETING METRICS, 50 FACTS ABOUT CUSTOMER EXPERIENCE FOR 2011
VALUABLE CUSTOMER INSIGHTS
Loyalty programs are no longer about simply receiving and redeeming points, but can also be used to measure any marketing tactics used (promotional offers, sales, etc.) and their results in reeling your customers in. The dollars spent on traditional marketing (PR, media, etc.) are not being discredited here, but simply being shifted lower in the ladder as many of the dollars spent can instead be saved by using the tools of loyalty.
Tracking customer spending habits and product preferences allows businesses to target particular customers who are known to contribute more to the bottom line. A loyalty program helps you understand what works and what doesn’t. As they say… ‘Know thy Customer’. The data a loyalty program could collect for your business provides you with an integral insight into the minds of your consumers so that you can now understand them better to make more relevant offers. It has been found that loyal customers make up about 20% of your total customer base but generate about 80% of the associated revenue by sales.
LOYAL CUSTOMERS ARE YOUR BEST ADVERTISERS
Everyone who is in the business to attract new customers knows that keeping the ones you have is on an average 6-7 times cheaper than finding new ones. Not only will a loyalty program allow you to do the former but it could also allow you to use these same faithful followers to help spread the word to their friends, who are more likely to take advice from friends than strangers (refer picture below). Happy customers tend to brag about their favorite brands and having an official system in place which could allow them to refer friends/family by offering related incentives is a tactic most successful businesses are already employing, and that’s based on a good reason.
SOURCE: INFLUITIVE, HOW TO CREATE A B2B REFERRAL PROGRAM THAT WORKS
SETS YOU APART
A myth that most businesses find themselves believing is that customers own loyalty cards from multiple stores, especially retail and grocery stores, and therefore, loyalty programs are ineffective. However, there is evidence to suggest that customers do end up making almost 67 percent of their purchases in their favorite store, making their top brand their dominant spend. In such cases, what needs to be considered is that having your own loyalty program is the first step, but it’s the differentiating factors incorporated that could truly set your store apart.
AND SO FINALLY…
If you don’t have a loyalty program in place yet, don’t worry because it has never been easier, and cheaper, to get one. At TapMango, we make it possible for any business owner to setup their very own loyalty program, not just comparable to those already out there but so much better. A program customized for our merchants’ specific requirements and targeted at helping them increase sales at an affordable price.
For any questions or concerns regarding this article, please contact us at pr@tapmango.com.
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