3 Reasons Your Business Should Have a Customer Loyalty Program
Customer Loyalty Program
Customers are smart. You won’t be able to trick them into buying a product or service. Consumers are not going to bite on an offer unless they see considerable value for their time and money. As a result, companies are constantly challenged to provide offers consumers see as valuable.
Contributing to this daunting task is increased competition. There is a vast wasteland of similar products customers can choose. There’s no longer a dead-end alley with one product choice at the end. Power has shifted to the consumer.
Loyalty Programs enter stage left.
There is no guaranteed remedy to the problem that is customer acquisition and retention. However, Loyalty Programs have demonstrated significant return when executed properly – just take a look at Starbucks (Marketing Mag, 2014) . Loyalty Programs offer a way for businesses and consumers to trade using equal value.
Why should your business implement a Customer Loyalty Program?
1. Increase Customer LTV (Long-Term Value)
Every customer comes with a monetary value attached to them. Calculating a customer’s LTV lets the company know how valuable they are and how much they should be willing to spend to keep them.
If a customer signs up for a loyalty program, they are more likely to buy from your company again AND they are more likely to spend more each time they purchase. According to Bia/Kelsey, repeat customers spend 67% more than new customers. “HOLY MOLY, my customer LTV is going through the roof!” – You. Yes, getting loyal, repeat customers is often more beneficial than trying to constantly attract new customers and is definitely cheaper.
In addition to financial return, customers participating in a loyalty program have the potential to have lasting effects on your brand image. Loyal customers often turn into brand advocates for your company – a wonderful thing. What’s even more wonderful is the ease at which brand advocates can express their customer experience to the world. Social media is pretty cool, and when you have a bunch of people spreading positive stories about your company, often more good happens than bad.
2. Facilitate Communication
Developing a relationship with your customers is more important than ever. Creating a loyalty program opens up another line of communication between you and your customers.
You should never need an excuse to talk to your customers, however, if you have a running loyalty program you will no doubt be getting feedback from participants. Feedback is important– it allows you to alter your product for the better and creates vital communication between you and the consumer.
3. Consumer Data
DATA IS KING.
Companies should jump at the opportunity to learn more about their customers and making a decision on how to serve you customers should not be done without knowing them.
Loyalty programs are a great way to collect data on your consumer. The more data you are able to collect means the more you know about them. The more you know about your customer, the better you’ll be able to serve their needs. The better you are able to serve your customer, the more customers you will keep. The more customers you keep the more money you’ll make.
Okay, maybe it’s not that simple, but collecting data on your customers is a crucial step on the way to a successfully serving your customers.
1. Loyalty programs make your customers more valuable
2. Loyalty programs help create relationships with your customer
3. Loyalty programs help you serve you customers better