Guest written by: Abdul Nazeer, CEO, Bebuzzd
Sometimes, one of the chief worries of today’s businesses is when they no longer see regular customers walking into their establishment, asking themselves, ‘Where have they all gone?’ This leads to formulating key strategies on how to keep customers coming back, lining up ideas that can help retain their presence like freebies, promos, access to select products and services—all in the spirit of making them feel like preferred customers with cool privileges. The move towards effecting customer retention has led to the creation of the loyalty program concept, which are structured marketing strategies designed to encourage customers to continue to shop at or use the services of businesses associated with each program.
Retail industry experts have explained the phenomena of loyalty programs as an essential initiative that every business should run, in order to maintain a key flow of profit into their endeavors. The concept is actually simple to understand as these businesses can only serve a limited number of customers at any given period, however, the presence of loyal customers is what makes it possible for the business to perpetually make sales and stay profitable.
Moreover, implementation of a loyalty program proves to be a win-win situation for both the business and the loyal customer—the businesses is assured of continuing presence of clients while the customers get to save on cost and receive rewards. For businesses, especially the personnel tasked with marketing them, running a loyalty program is a significant responsibility that plays a key role in its success. In fact, recent industry reports show that 61 per cent of today’s retailers have listed customer retention as one of the biggest challenges they face.
Here are eight reasons to explain its importance:
- The program can drive in more growth for the business: Different loyalty programs may yield wildly different results, but as a marketer, you should never overlook the fact that loyalty programs have been tested time and time again, and have proven to be successful in numerous industries. Offering key incentives can play a big role in driving in more sales activity, hence, more revenue growth for the business.
- Running the program is cost-efficient: Some marketers believe that loyalty programs, will eat up a large portion of existing resources and that they may or may not see success. In reality, however, pursuing new customers is the true cost burden. The resources you utilize in a loyalty program will most likely pale in comparison to the expense of finding new buyers. Industry experts have always noted on the cost efficiency of running loyalty programs, as it is more efficient to retain customers than finding new ones.
- Further strengthening your brand name and image: Boost your reputation!: Loyalty programs serve a dual function: to incentivize new clients to stick around after purchasing your goods and services, and to ensure that existing loyal clients still feel as if they are valued by your operation. The more a customer feels appreciated by a business, the more he or she is likely to support that company and recommend it to others. This, in turn, carries on in a word-of-mouth cyclical nature that continues to achieve growth for your business.
- Attractive offers and incentives will play a key role in increasing your sales: Marketers and business owners enjoy loyalty programs because they have the ability to improve customer retention. Customers appreciate loyalty programs, however, because they often provide added incentives for making a purchase, with the rewards increasing linearly (or even exponentially) with more purchases, or depending on the size or scope of the item purchased. Therefore using a loyalty rewards program in your marketing strategy will help provide you with access to a bigger portion of your customers’ wallets.
- The program will give you a better understanding of your customers: Loyalty programs usually keep key information on their customers, which in turn, will allow businesses to learn more and understand them better in terms of preferences, likes, etc.
- Your customers are happier and more satisfied: The success of a loyalty program can be seen in the high levels of satisfaction and happiness of their customers. By deciding to implement a loyalty rewards program, you are sending a message to both your current and future client base that you are interested in not only making money off of purchases, but also in a relationship with customers that is mutually beneficial.
- It becomes a strategic platform for you and the customer to interact: One of the most beneficial parts of loyalty rewards systems, is that it becomes a strategic platform for both the customers and the business owners. Based on the tactics, the rewards can be applied to purchases made online, in person, or both. This provides you with the chance to offer a robust set of rewards for a broader array of clients.
- Once the program meets its objectives, it becomes a self-sustaining system for the business: Once the program is successfully implemented and has gone thru initial cycles, the endeavor will be self-sufficient and can oversee the customer activity of its members.
An example of a well-run loyalty program is one that allows businesses to run their own loyalty program while being a part of an exclusive and extensive network. Such programs should also help local SMEs in their efforts to retain their existing customers and also turn new customers into loyal customers.