With the constantly changing world of technology and the choices that the consumers are bombarded with, digital commerce has become more exciting than ever! But at the same time, it has given a rise to competition among the marketers to retain the customers who’d remain loyal to their brands. As it has been long established that having a loyal following goes a long way, marketers now have to figure out how they can earn that. Loyalty programs have been the solution, wherein, the consumers get to experience a lifetime of reward system for choosing a particular brand.
Many marketers have had a loyalty program in place for quite a while now, but research shows they too have been through their fair share of struggle to perfect them. “Vision without execution is hallucination” – Thomas Edison. Researchers at Experian concluded that 64% US companies with loyalty programs said that their data collection needed improvement, 56% mentioned the process for customer sign up needs improvement, and 53% of the companies saw the need for greater personalization. Based on the stats, it is important for the marketers to know what the best practices for a loyalty programs are. How much should be invested in the same and how to ensure that the program is effective and achieving the targets that have been set or also what kind of loyalty program should be put to use!
How does a loyalty program work?
There are a wide variety of loyalty programs, each of which has its own set of pros and cons. The few main styles out of which are as follows:
Cash back or rebate program
Customers earn money back from the purchases they make. Once certain amount or time limit has reached, the customers can redeem the rewards for cash. The rebate system is based off of a percentage of total purchases during certain time period. The program is easy to understand for the customers, but expensive to implement.
This program offers a discount at the original price of the product that has been purchased. Discount programs are easy to understand, but may give the customers an impression that your original prices are too high.
In these loyalty program systems, customers are often given points, in exchange for the amount that they have spent in your store. The point system is great way to avoid discounting merchandise, but the marketers have to come up with different ways to keep their customers updated about the status of the reward program.
This reward system comes in handy for the businesses with expensive merchandise; and also is a great way of figuring out how frequently a customer visits your store and makes purchases on a consistent basis. It is a great way to keep the customers engaged, as they get rewarded every time they make a purchase and the reward is determined on the basis of the amount that they have spent. Brands can mix and match and also collaborate with other brands to create a unique loyalty program that works best for them and also caters to the customer needs.
Considerations that a marketer should keep in mind before designing a loyalty program:
Our take on it?
As we have seen, loyalty programs have had a huge impact on the e-commerce industry. They help increase customer retention and transaction value, while keeping the investment cost low. The ratio will always be clear; marketers have 60% – 70% chance of selling to their existing customers, whereas they have only 5% – 20% chance of getting a sale from a perspective customer. Reward programs when executed in the right way, have the potential to keep your customers returning back to your brand. Just like Open Loyalty, which is loyalty software for developing dedicated loyalty applications, prepared for large-scale projects, proven by partners. Need more information on what kind of a loyalty program will best suit your business? Reach out to us at firstname.lastname@example.org