“You don’t earn loyalty in a day. You earn loyalty day-by-day.”– Jeffrey Gitomer. Like the renowned American author, professional speaker and business trainer has rightly put into words, loyalty is something that takes years to build on. For the longest time, marketers have been experimenting with new strategies to get a recurrent base of customers and working on product positioning and marketing to lure in new customers; studies found that it was at least 6 times more expensive for a business to acquire new customers than to keep an existing one.
Brands today are made up of products and services they provide and the experience they have to offer, but also it is their customers and followers that make a brand stand out. Followers, supporters, loyal customers who stick with a brand are the result of how a brand preserves and maintain their goodwill while taking along the consumers with them. 95% of customers say trusting a company increases their loyalty towards it.
A combination of modern technology and changes in the recent trends, there has been a rise in the number of millennial and Gen Z customers in the already existing pool customers; creating an undeniable competition, as changing brands has become easier than ever! 77 percent of consumers say they’ve held relationships with specific brands for 10 or more years. This is even true of 60 percent of Millennials, despite being relatively young (Source: Inmoment). In recent times, as more and more people are embracing technology, businesses too need to stay in the same loop and adopt available tools and technologies to facilitate seamless experiences for customers.
As MDA subscribes to the same ideology of going hand in hand with new technologies and tools available in the market which is why it has partnered with Open Loyalty which is loyalty software for developing dedicated loyalty applications, prepared for large-scale projects, proven by partners. Loyalty marketing refers to building trust among the recurrent customers and encouraging and rewarding them to return to the brands they frequently purchase with. For many brands, 80% of all their business comes from 20% of their recurrent customer base.
What is a loyalty program?
Previously loyalty programs often came in the form of redeeming proof-of-purchase which made the customer eligible for receiving special products from the same brand. Today, with everything going digital, these programs are operated through card purchases, using digital information of the customers. The customers may register themselves with the company by sharing their personal information and in return, they are granted with numerical ID or membership card which can then be used while making a purchase. This method can then be used to instilling and retaining customer loyalty with incentives that may include advanced access to new products, additional discounts or sometimes free merchandise.
Value of a Good Loyalty Program
How does a loyalty program add value to the businesses?
The Starbucks Reward Program is a perfect example of how a brand can retain customers through interactive offers. The app has exciting offers for the customers wherein they can earn points to use for future coffee purchases much like any other reward programs; the difference lies in the services they provide along with the offers. Starbucks provide their customers a convenient way to order ahead, pay in store and even access exclusive music playlists. Other brands like Costco and Amazon have achieved greater customer loyalty through their annual memberships.
Loyalty program applies to the businesses that thrive on their return customers. And as proven from time to time, acquiring new customers is more expensive than selling to an already existing one! Hence, the prospect of creating an army of loyal customers is fundamental for adding value to the business. When executed properly, loyalty programs help generate new customers from the existing ones at considerably lower costs that may otherwise be required in traditional marketing methods.
The kind of customers’ loyalty program is effective on:
Loyalty program thrives on a brand and consumer relationship that already exists and works on strengthening the bond even more so. Customers who make regular purchases from the same brand or the same companies are the ones which are the most impacted by reward programs, as their repetitive purchases earn them more rewards.
Also, new customers may be obtained through incentives and referrals from existing customers; which again depends solely upon maintaining the loyalty of the original customer base. It also has a lot to do with the complexity of the loyalty program and the technology that the brand chooses to implement; based on which more specific market segments can be targeted.
The Value of Existing Customers
You know that your existing customers are valuable, but did you know exactly how valuable are they?
Here’s what Pawel Dziadkowiec, Head of Strategy at OpenLoyalty.io had to say about loyalty programs,
“There are many different purposes, why loyalty programs are used by companies. From the perspectives of the program owner, the general expectations are: loyalty must be low-cost, must bring additional profit and must be payback as soon as possible. So, if you have a well-designed loyalty program with the right IT platform and technology, it is easier to learn how to manage your loyalty program and how to implement very effective activations and efficient promotions that will bring additional benefits to the company.”
Our take on it:
Loyalty programs are a reward in return for brand loyalty by its customers. They provide perks intended to retain existing customers and attract new ones. With new opportunities soaring with developing technology, loyalty programs bring additional benefits to the companies and also for its consumers. Want to know how you can incorporate a loyalty program into your business? Reach out to us at email@example.com