It is often underestimated how important customer loyalty programmes can be and how surprisingly simple they are to implement, especially in today’s digital age.
They can, of course, bring many benefits to your business – beyond the simple fact of adding satisfaction for your regular customers. Here we outline five ways your business can profit from starting a loyalty scheme:
1. Customer retention
The most obvious benefit of a customer loyalty programme is that it improves retention. Customers want to accumulate points to get the rewards or exclusive benefits on offer and will be tempted to favour your business over a competitor’s in order to achieve these.
As retention improves, so does the lifetime value of your customers. This metric considers the value of a customer since the first time they completed a purchase, instead of focusing on their current worth. By retaining customers, your business can generate maximum revenue from each customer over a longer period and improve their lifetime value, which also optimises your return on marketing investment.
2. Customer data
A customer loyalty programme allows you to collect additional data about your target audience. Most individuals are willing to share a little extra information in return for loyalty rewards, and you can use this to improve your understanding of your customer base.
The extra information helps segment your customers into different categories, which improves your ability to better target them with marketing campaigns. Your loyalty programme thus turns full circle: your customers give you information in return for rewards, and you give them what they want, with better marketing and the products they love – which also improves customer retention!
3. Business planning
Once you have implemented a loyalty programme and gathered extra data on your customers, you can use this information to better plan your business strategy. Whether the information is in terms of money spent, demographics or buying behaviour, it will help you plan your business decisions based on solid data, instead of guesses and assumptions.
For example, suppose you are thinking of starting a new product line. Your market research will provide details of your target demographic by age, gender, location, income and other factors. Comparing those to the information you have gathered through your loyalty scheme will instantly show you whether you have a good match or need to reconsider.
4. Increased customer purchases
The mere presence of a loyalty scheme encourages customers to spend more at each visit, to earn more rewards. You can further extend this effect by running limited-time promotions, offering extra points on a specific product or service range (usually the ones you want to clear from stock), or even creating ‘treasure hunts’ for promotional codes hidden throughout your site. The possibilities are only limited by your imagination and your site developer’s ability!
Combining your loyalty programme with marketing campaigns can also generate extra purchases. For example, you could run a simple ad that offers extra loyalty points for signing up and bonus points for spending more than a given amount on their first visit, provided they use the correct coupon code.
5. Competitive advantage
In a competitive global market, you need to make the most of every possible advantage to beat the competition. Having a customer loyalty programme gives you a strong advantage with many benefits as you can see from this short list. To put it simply, the more creative you are with your loyalty programme, the further ahead of your competition you will be.
Remember to make sure the programme is attractive to your target audience and kick it off with a starter bonus to get them to sign up. Once the programme is set up and rolling, it will gain momentum with every new registration and every promotion you run!
How we can help
If you want to find out how something like this could benefit your business, please get in touch with Jeff Huggins and our friendly Business Services Team on 01293 227670