How to Develop An Effective Customer Loyalty Program
Having a good customer loyalty program in place can generate tremendous growth for your bottom line by not only reducing your marketing and sales budget but also improving the customer experience. Within the steps of the customer journey, there are many steps from discovery to purchase, and many touch points a person takes before deciding to buy from your business. You not only need to make them aware that you exist, but you also have to educate them on the product, and move the potential customer to an owned platform, either a website or email. Once they’re on, you have to impress them enough and provide a seamless user design flow to help make purchasing easier. Now, imagine you could eliminate many of those steps just by getting an existing customer to buy from you again. Since that customer already knows who you are and the value your products and service provide, you can spend your efforts focused on convincing them to give you another try.
Customer loyalty means your customers will keep coming back to you. Customers who feel valued and have a positive experience with your brand and products are more likely to return again. That means the more repeat customers you have, the less you’ll have to spend on conversion tactics like abandoned cart offers, or traffic retargeting. If a customer has the intention to continue a relationship with a business, either through repeat purchases, renewed subscriptions, or continued engagement, then that is considered customer loyalty.
Customer loyalty is important for many reasons, not only is the cost considerably less to convert and existing customers, but new customers can stay at the top of the funnel long, as you work to move them towards the buying decision. Perhaps the biggest advantage of customer loyalty, other than repeat business, is that loyal customers typically spend more and they tell their friends. So you increase your revenue and grow your customer base.
– Connect with your brand’s message
– Understand your product/brand
– Believe in the value of what you offer
– Advocate other prospects on your behalf
Customer loyalty goes beyond social media engagement, giving out loyalty points, or referral rewards. Customer loyalty acknowledges that your customers are highly valued people who you appreciate. So, your customer loyalty program shows them that appreciation through rewards and incentives.
What is a Customer Loyalty Program (and Why Does it Matter)?
Customer loyalty happens as a result of multiple positive interactions that build up a feeling of trust over time between a customer and a business. It’s what drives repeat purchases and prompts existing customers to choose your company over a competitor offering similar benefits. A customer loyalty program brings back and retains those existing customers with creative initiatives and incentives to enhance the customer service and shopping experience.
What are the Benefits of a Customer Loyalty Program?
Retaining a loyal customer base has a multitude of benefits for a business. Customers aren’t just revenue streams, but brand promoters, as well. It also costs less to retain a current customer than it does to acquire a new one. Also, engaging existing customers who already have prior knowledge and experience with your brand makes it easier to convince them to buy from you or renew with you again.
Increase Customer Retention
A steady increase in retention is an asset to any brand. Those customers bring in more revenue, have a higher customer lifetime value, a higher average purchase order, and also have higher chances of becoming brand advocates and represent the brand as a true loyalist. Who doesn’t love customer referrals?
Reduce Marketing Costs
Most of your sales and marketing budget and strategy is dedicated to acquiring new customers and retargeting visitors to move them down the funnel. With loyal customers who purchase frequently, businesses can reduce their marketing spend significantly. Which gives you an opportunity to grow and scale your business in other areas.
Acquire New Customers Through Brand Advocacy
Happy customers love to spread the word. Loyalty programs encourage customers to positively influence those close to them to also become customers with a brand they love and feel connected to. If a loyalty program offers great rewards to customers for purchases and referrals, it aids in promoting brand advocacy and tremendously helps in widening the customer base.
Improved Customer Engagement
Customer engagement is very important in the long run. A brand that doesn’t connect with its audience struggles with maintaining a positive, and memorable brand image. A loyalty program increases customer engagement by strengthening the bond between brand and its customers through direct and frequent communication. Not just through selling messages, but communication where the customer feels heard and valued.
Increases Avg Order Value
Customers can save money on purchases and earn perks, incentives, while businesses earn more from consumers enrolled in loyalty programs. With exciting rewards, brands can influence purchase behavior. Buyers spend more to attain points, reach the next level, and gain access to exclusive features and benefits.
How Do You Start A Customer Loyalty Program?
Starting a loyalty program is not an overwhelming feat. You can launch, grow, and manage a program that suits your brand’s budget and customer’s needs and wants. Start with your goals and take a look at opportunities in your current acquisition strategy. Just be sure to give your customers rewards that are valuable and relevant to your business.
Know Your Customers
The first step to launching a successful loyalty program is to get to know your customers. You need that data you’ve gathered from your social, email, and web analytics, customer surveys, customer focus groups, social conversations, etc., to understand what will motivate your customer to return to your shop. Getting an understanding of your different customers’ personal preferences, you can start to tailor your program to suit as many customers as possible based on their expectations of your brand.
Decide Which Loyalty Program Is Best For You
There are several different loyalty programs that incentivize and reward customers.
– Points rewards: focuses on rewarding customers for every purchase they make with points in a point system that can be collected and redeemed on future purchases.
– Membership rewards: customers pay a one-time or annual fee to join your VIP list. Members are able to access unique rewards or member-exclusive benefits.
– Levels/Tier rewards: Uses different tiers to increase the level of brand loyalty. Each level unlocks greater benefits and rewards than the last.
– Partnership rewards: One brand partners with another to provide a collection of exclusive benefits to their collective audience that can be redeemed with either brand.
Choose You Want To Reward
Determine the rewards and interactions you’d like to reward. The better the reward options and the easier the interaction opportunities, the more participation you will receive from customers. You can choose to reward customers for shopping during the off-season or slow period. You can also reward customers based on the amount they spend, or the new customers they refer.
Promote Your Program
Customers can only sign up for your program if you promote it. Be sure to integrate a call to action on your website, social posts, and of course your newsletters and post-purchase emails to get your customers and prospects excited to join.
While attracting new customers is essential for all businesses, it’s equally as important to make sure you’re retaining existing customers. There are many effective customer retention techniques, customer loyalty programs are the most successful. If you have happy and satisfied customers, they continue to buy from you, spend more than others, and are more likely to become brand advocates. Keeping customers coming back for more is critical to business success. Customers enjoy fantastic discounts and offerings tailored to their needs and preferences, and your brand enjoys lower churn rates, more organic acquisitions, and higher profitability. It’s a win-win for all.