The True Value of Customer Loyalty Programs

by Siya Carla, Guest Contributor

It's the customer that decides if you are going to rule the market or not. Yes, the customer is the king! Everything a company plans keeps the customer as the core and centric propaganda at all times. In this era, when competition is vicious and tense, retaining a customer has become extremely challenging. Enterprises have to come up with bright and trending idea that keeps them alive in the market or else the only option is to go extinct.
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A successful loyalty program increases productivity, profitability and ROI.

Maximizing a customer lifetime value is what will make a business profitable and sustainable for years to come. With a good view of success and failures in the market, it's proved that increasing customer retention rates by as little as 5% can increase your profits by up to 95%!

Most of the shoppers in the market are looking for more than just discounts alone. The best way to retain customers lies in the powerful strategy of loyalty programs. Loyalty programs are used by all leading brands to trigger customers, deepen the relationships and gain valuable insights. If planned right, it can lead to loyal customers who would always rely on the brand for any product or services.

The key to creating a successful loyalty program is emphasizing on generating a meaningful and communicative exchange with customers. This way a customer will feel honored while making them recognized, acknowledged, and of course, rewarded at the same time.

“76% of shoppers see their loyalty program membership as part of their relationship with the brand. But 97% of loyalty programs are based on spending money to earn money.”

Planning and executing a successful loyalty program increases the productivity, profitability and generates a good percentage of return on investment as well. But, a business has to think beyond just rewarding for purchases alone. A loyalty program is far beyond than just rewarding customers for purchases.

An enterprise has to think ahead and surprise customers with additional benefits on most of the factors that promote the growth of business amongst customers. This includes reward or recognition of customers for engagement like comments, reviews and referrals. Such marketing tactics eventually help to generate a higher average order value and repeat business. Profitability is just one of several benefits that a customer loyalty program can attain.  

“Econsultancy reports that 82% of companies they surveyed agreed that customer retention costs less to execute than customer acquisition.”

To plan an effective loyalty program campaign, one needs to get through a few questions that will chalk out the necessary answers to the program. An enterprise must think about its current customers and face questions like:

• What do customers need?
• What is their current problem?
• Where can you as an enterprise generate value?
• Where can you as an enterprise include technology to be more efficient and solution ready?

Answering these questions could bring a clear picture of how exactly you should plan the loyalty program and generate maximum RO. It's important to hit the bull’s eye with the campaign.

Let’s talk about a few loyalty insights that would cater to marketing the business as well. Such theories applied to loyalty card brings immense benefits and be more connected with customers.

• Optimize offer and promotion liberation for customers to get attracted to be habitual in buying product/services. 
• Enhance program features and experiences for customers to bring them habitually to buy products/services  
• Move customers to become brand ambassadors so that they do word of mouth communication to other prospective customers  
• Identify and nurture high-value prospects so as to gain their confidence and regularize them in being a frequent buyer  
• Influence merchandising and store planning so that it impacts customers with reorganization as improved and enhanced business that sorts the hassle of multi-channel challenges  
• Use customer behavior metrics to plan loyalty program framework thus enabling the business to understand customer pain points and then work towards solving the pain areas.

Working on both retaining and acquiring customers remunerates an enterprise in its own ways. This highly depends on the ability to provide the audience with an effective marketing campaign that is more crucial than ever.

Today, technological advances allow penetrating deep into the market to have a greater understanding of individual customer preferences; thus making it easier for business to come back with a plan that not only benefits the consumers but also the business overall.
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Author

Siya Carla is Business Development Manager at Finoit Technologies, a leading mobile app development company which turns ideas into reality by providing unique web design and custom software development services.

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