If you’re looking for a way to grow your customer base, retain current clientele and increase revenue, consider building out your loyalty program.
In fact, 75% of U.S. companies with a loyalty program generate a return on investment, according to a recent report from Experian on driving customer loyalty.
What’s more, when done well, loyalty programs can delight customers. And that’s valuable.
According to the 2017 Loyalty Report from Bond Brand Loyalty, 81% of consumers say that loyalty programs make them more likely to continue doing business with brands.
But it’s important to develop a customer loyalty program that supports your objectives.
“Unfocused loyalty programs that do not properly align with marketing and business goals ultimately will be very costly to the organization,” according to Experian.
Fortunately, there are plenty of resources to help you develop a program that works.
Talus Pay, for instance, makes it easy to build a loyalty program through its point-of-sale software. And it’s free!
How much revenue can you generate with loyalty programs?
How much can loyalty programs help a company grow its revenue? Quite a bit, as it turns out.
For example, in financial services, increasing retention rates by just 5% can boost profits by more than 25%, according to research done by Frederick Reichheld of Bain & Company.
And according to Motista, customers who have an emotional connection to a brand has a 306% higher lifetime value to retailers.
Creating a Customer Loyalty Program that Works
Loyalty programs typically offer a reward benefit to customers who continuously engage with your brand. Those rewards could include free merchandise, coupons, and exclusive sneak peeks for upcoming products or events.
Luckily, you can pull examples from some of the best brands in the marketplace who are doing customer loyalty the right way. Bond Brand Loyalty recently rated companies like Southwest, Amazon and Panera Bread as having some of the best loyalty programs around.
But loyalty programs aren’t cheap. According to Black, investments in loyalty programs can reach as high as 5% of sales.
That means you’ll need to think through your loyalty program in order to make it a success.
Black suggests keeping rewards fresh. “Loyalty programs have to be consistent, but consumers also like novelty,” she writes.
Think about frequently introducing new and different benefits that may excite customers. But make sure to collect data and analyze the effectiveness of your new offers, notes Black.
Here are a few types of loyalty programs to consider:
- Points rewards: Customers participating in these types of programs earn points for purchases, which turn into rewards such as discounts, free items or early access to exclusive products.
- Refer-a-friend: With this model, customers earn rewards when they tell friends about your business, and those friends become customers.
- Membership-based loyalty programs: This model charges an upfront fee to members who then earn loyalty rewards. Customers are able to access exclusive perks and avoid inconveniences by becoming a member.
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Tracking the Success of Your Loyalty Program
Companies use a range of techniques to track the success of their loyalty program. But according to Experian, the most popular method is to track customer retention. That’s monitored by 63% of companies.
Other methods include tracking the:
- Engagement of enrolled customers
- Lifetime customer value
- Number of new member sign-ups
- Revenue attributed to the program
Regardless of other metrics you track, Experian notes that engagement with current loyalty members is one of the most important. It’s useful for figuring out if a customer is continuously bringing in revenue, or if he or she simply signed up for a one-time offer or coupon.
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