Customer loyalty is something every brand – big or small – aspires to have. A loyal customer can be an unintentional brand ambassador by raving about your products or services and the brand name you’ve made for yourself. Plus, brand loyalty can increase revenue as the customer is more likely to return time and time again without you needing to spend a high amount on operating costs to serve them or spend lots on marketing trying to gain a new customer. What better way to thank your loyal customers than to reward them?
If you’ve found yourself wondering, “How do loyalty programmes benefit customers”?or “Do custom loyalty programmes really work?” you’ve come to the right place! This article will discuss the benefits of loyalty programmes and if you need to create one for your business.
Why are customer loyalty programmes important?
Before we get into the benefits of loyalty programmes for you and your existing customers, we should discuss why loyalty programmes are important.
Imagine you’ve found the perfect brand that offers exactly what you want. You love their products or services, and you’ve already bought from them a number of times. Your trust in the brand is building, and purchasing from them seems easy and a no-brainer.
Now imagine they introduce a loyalty programme where you get rewarded for spending money on their products – something as simple as gaining points for every pound that you spend, which you can redeem at their store. You’ll now more than likely feel even more valued as a customer and more motivated to spend money.
Plus, if a similar brand comes along, if their reward scheme is not as good or non-existent, you’re more likely to stick to the brand you know and continue to reap the benefits of a loyalty programme.
These reasons explain why loyalty programmes can be so important to a business and to a customer in the buying phase.
The benefits of customer loyalty programmes
1. Increase your CLV (customer lifetime value)
The customer lifetime value tracks how valuable a customer might be to you now and how much the relationship might be worth in the future. It’s the net profit which is attributed to the relationship you maintain with the customer.
A loyalty programme can help improve the CLV, as customers will more than likely spend more money and purchase more frequently when they are rewarded for shopping with you or using your services. This will increase the average order value and purchase frequency, which will positively impact the CLV.
2. Improve retention
Not only is it cheaper to retain customers than attain new ones, but studies show that returning customers spend 67% more than new ones. It can also cost 5 to 10 times more to secure a new customer. So, if your business is losing money trying to acquire new customers, a loyalty programme can help you keep current customers and turn them into returning, high-value, low-cost customers, reducing your churn rate – the number of customers who stop doing business with you after a certain period.
A loyalty programme can significantly increase your return rate and help turn one-time buyers into repeat customers, which will ultimately save you money.
3. Increase customer purchase frequency
You may already have a strong repeat customer base, but their purchase frequency is low. An easy way to help improve this is a customer loyalty programme. Offering your repeat customers (and even new ones) rewards for using your services or purchasing from you is a simple way to encourage them to purchase more often. Rather than just seeing the funds leave their bank accounts, they’ll see the rewards they are gaining from continuing to be loyal customers.
4. Stop you from competing with others solely on price
Although you might hate to admit it, there’s probably a business out there that is similar to yours and offers the same, or as close as, products/services. A lot of the time, customers will jump ship to other businesses if the price is better.
However, if you were to offer a strong loyalty programme, customers might be inclined to stay even if your pricing is higher than a competitor’s. Offering rewards to your customers connects with them on a more personal level and helps improve your relationship with them while expressing your brand’s values, which the customer will connect with.
5. Customers can become brand advocates
We’ve touched on this briefly above, but a reward scheme for your customers can turn them into brand advocates. Loyalty programmes don’t just have to be rewards for purchasing. You can reward customers for a number of other things, too such as referring a friend, posting on social media, or leaving a review. This can create a relationship that will benefit the customer while they are spreading positive word of mouth about your business.
How Another Way can help
If you’re thinking of creating a customer reward scheme but are unsure of where to start, our experience team at Another Way can help. We can create a bespoke reward programme for your business that will drive engagement and increase customer loyalty. We will create a prize package that will match your brand and business and it will be tailored to your needs.
If you are interested in our services please contact us today and we will be happy to answer any questions you may have.
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