6 Reasons Why a Customer Loyalty Program is Good For Your Business
Retaining a customer is significantly cheaper than trying to acquire a new one, which is why businesses must devise a strategy to improve their customer retention levels. One effective way to do this is to have a customer loyalty program.
Simply put, loyalty initiatives allow you to reward repeat customers and do more than just satisfy them. Apart from this, customer loyalty programs are good for your business due to the following reasons.
Retain existing customers
A study states that 50% of customers use a company more frequently after a positive customer experience. A customer loyalty program allows you to improve customer experience and increase satisfaction by focusing on your best customers. Customers will appreciate the fact that you have taken measures to recognize their importance to your business and your willingness to reward them for it. This will reduce churn and instead encourage customers to keep coming back to you.
Acquire new customers
While nurturing existing customers is critical, acquiring new ones is always a must. There are a lot of other effective ways to attract new customers but having a loyalty program will help. The challenge lies on the type of program you have and how exciting and valuable the rewards will be to your target audience.
Build personal relationships
Relationship marketing can be powerful. Connecting with your customers on an emotional level and building a genuine relationship with them will improve behavioral loyalty and increase your profits. To achieve this, you have to do more than simply giving rewards. Take the time to get to know your customers’ specific needs. Doing so will enable you to develop a positive and creative loyalty program that will give them the most value.
Creates brand advocates
The importance of brand advocates cannot be overstated. Not only do they spend more, they bring in more customers to you too and helps you save on marketing and promotional costs in the process. Because advocates are pleased with your business, they will not hesitate to share their experience with their family and friends as well. In fact, a study shows that 87% of customers share good experiences with others. This is especially important because people are more easily convinced by a personal recommendation rather than any marketing strategy in making purchase decisions.
Increase customer spending
A Zendesk study reveals that 52% of consumers have made more purchases from a company after having a good customer service experience. Loyalty programs help increase the frequency of customer visits and as they try to unlock more rewards, the amount they spend on your business each time they visit increases as well.
Competition among brands is tougher these days and businesses must be able to set themselves apart. Loyalty programs will allow you to differentiate your business and prevent you from competing based on price alone.
The data you will be able to collect from your loyalty program will also help you segment your customers into groups, allowing you to offer customer specific deals. Aside from this, loyalty programs will likewise help you formulate a better pricing structure as well as plan merchandising and stock lines more effectively.
The bottom line is, your business will not survive without your customers. Having a customer loyalty program gives you a huge opportunity to get to know your customers better, which will then enable you to serve them better.