To reward or not to reward? might once have been a question companies asked themselves. But in a time where customers have more options and are more mobile than ever, the question is no longer if, but how.
Compared to generic and purely price driven offers and discounts, loyalty programs can provide crucial long-term benefits to your organisation.
But how do you know your business is ready for a loyalty program?
Sign one: You are looking to boost customer retention and engagement
If your customers aren’t returning for repeat business even when your products and services have clear repeat purchasability, you have a problem. Figures abound about the value of retaining existing customers over acquiring a new one, with estimates suggesting it costs five times as much to acquire a new customer.
The Harvard Business Review reports that increasing customer retention by just five percent can increase profits by 25-95 percent.
Loyalty quite simply translates to increased business. And loyalty programs enable you to develop the strong engagement with customers that helps create loyalty.
According to management consultancy Bain & Company turning customers into loyal advocates can add more than US$60 a month to their carts, with US consumers who were loyal to a grocery retailer spending an average of US$132 a month, while those that gave the company lower ratings spent just US$71 a month.
Sign two: You want to drive upsell and cross-sell activity with your customers
Would you like fries with that?
Ok, buying fries with your burger doesn’t require a loyalty program. But it’s a great example of upselling your customer new complementary products and services – something loyalty programs are also great at doing.
In a Harvard Business Review report, 42 percent of executives cited increasing the number of products/services used per customer as a primary goal for their loyalty strategy.
Leveraging a loyalty program you can offer benefits for buying from a particular category or for spends over a certain amount to incentivise your customers to try new offerings or purchase more.
Sign three: Your customers are hungry for value
Just like in any relationship, your relationship with customers is most successful when both parties feel they’re benefiting. Your customers want to feel appreciated and to feel that your brand is helping them, particularly in difficult times. CapGemini’s 2023 consumer behaviour tracker shows 78 percent of consumers say they will be more loyal to those companies that help them through the current cost of living crisis, with 74 percent saying they will purchase more products or services from those companies that help them now. Consumers surveyed want that help to come via a wider range of discounts to help them purchase essential items and bigger discounts in exchange for being loyal customers.
Customers have been turning to loyalty programs in recent times to help ease the cost-of-living pressures – and your loyalty program can be a strong indicator of your willingness to help customers, as we outlined recently.
But even beyond tough financial times, customers seek value and will reward companies for providing it. A Gartner report shows receiving value during a service interaction increases the likelihood of sharing positive word of mouth by 97 percent and increases wallet share by 86 percent.
Sign four: Your marketing is not personalised
Customers’ patience for impersonal experiences from businesses are hitting a low, with stats from McKinsey showing 71 percent of consumers expect personalisation. Twilio’s State of Customer Engagement report found that 66 percent of consumers will quit a brand if their experience isn’t personalised with 86 percent saying personalised experiences increase their loyalty.
Further, brands that create personalised experiences through integration of advanced digital technologies and proprietary data for customers are seeing revenue increase by up to 10 percent according to BCG.
A customer loyalty program can provide you with data you need to personalise your program and provide your customers with relevant, meaningful offers.
Sign five: You have system and operational friction in the purchasing process
No one likes friction and in the purchasing process it can quickly lead not only to cart abandonment, but to disillusioned – and disgruntled – customers.
Reducing the amount of effort a customer must put in to do business with you is key to a successful loyalty program.
Brands that have embraced seamless integration of payments and experience – think ride share or food delivery – have set new benchmarks for a heightened customer experience.
Embedded payment technology offers the opportunity for brands to add loyalty features such as points redemption (pay with points). Investing in this type of technology can also lead to a better customer experience and reflect positively on your brand. An ADAPT survey of CIOs confirms that improving customer experience can be a major driving force in the digital rejuvenation of a business.
Loyalty programs can be one of the most effective methods to boost engagement with customers and provide a more personalised service, increase business, provide customers with value, and remove friction from purchasing for your customers.
If you’d like to find out more about how your business can harness the benefits of a customised loyalty program, request a meeting now.