Even the best ad copy written by late David Ogilvy might fail during an economic slowdown. But, customer loyalty works well! Loyalty is a positive feeling attached to the brand. Consumers exhibit loyalty by purchasing products of the same brand after regular intervals. Competitors cannot lure away such shoppers even by offering lucrative deals.
Here’s how loyalty rewards programs can lead to a considerable increase in profits:
Mini-marketers and brand advocates can aid sales
A little bit of effort can turn existing consumers into loyal ones.
Remember, your loyal customers will give first preference to your products. Why? Well, because they already trust you.
Studies have pointed out that brand loyalty can turn consumers into brand advocates. They result in more referrals for your sales team. You can expect your brand’s loyal consumers to defend the business in social media conversations.
You want these brand advocates to create a buzz about your business on social media, don’t you?
As per a study conducted by the Temkin Group, even a single positive experience can work in your favor. Roughly 77 percent of happy consumers recommend a business to their contacts.
These mini marketers can help save resources spent on new consumer acquisition. A valued referral from existing buyers proves better than working on sales leads.
Nurturing loyalty leads to personalization in communication
A loyalty program platform involves capturing purchase-related data to monitor user preferences, trends, and buying behaviors on a real-time basis. You acknowledge various milestones, send them personalized reminders, and send product updates. Brands use email campaigns to acknowledge the timeframe post customer’s big-ticket purchase. Loyalty program apps also seek service feedback from consumers.
Personalized emails, text messages, and in-app notifications offer better results. Shoppers get a unique treatment whenever they communicate with the business.
Simply put, customers feel valued. Such initiatives help in developing an exceptional long-term relationship.
Boost business bottom line with existing customers
When it comes to the list of crucial factors resulting in growth, repeat purchase is in the top five. And existing customers are more likely to make repeat purchases.
Some firms often prefer allocating resources to get high-value consumers. But, applying the “In with the new, and out with the old” business strategy may not be the right approach. No doubt, new customer acquisition is crucial. But, it does not mean you let your existing customers go even if they are less profitable.
Research suggests existing consumers are 14 times more likely to make a purchase compared to new ones. Your existing buyers are 50 percent more likely to buy your newly launched products.
New customer acquisition costs have increased in the post-pandemic world. Why spend more when you can keep existing ones happy with loyalty programs?
As highlighted in the most quoted HBS report, improving retention by 5 percent can result in a 25 to 95 percent augment in profit. All thanks to digital loyalty programs.
Loyalty initiatives have a direct impact on spending habits
Besides nurturing long-term relationships, your firm’s loyalty programs can influence buying behavior.
A survey conducted by McKinsey highlighted that paid loyalty program members spend 60 percent more than non-subscribers.
Consumers try to get the most benefits out of the loyalty program. They change their spending habits.
Buyers expect loyalty programs to go beyond offering freebies. A points-based program can motivate loyal customers to shop more. You can also use special sale previews or members discounts to incentivize shoppers.
You can use creative ways to appreciate their devotion. Give them more reasons to make purchases.
Customer loyalty with empathy works well
You try to create an emotional connection with shoppers as a part of loyalty programs. Offering the best customer experience and addressing their concerns is the key. And this is where empathy comes into the picture.
Empathy is the best way to create loyalty. Businesses nurture when both go hand-in-hand.
You might wonder, can customer loyalty with empathy increase profits? Yes, it does. Hyundai’s “Job Loss Protection Program” is one of the best case studies to support the theory.
The Great Recession of 2008 hit almost every sector. Yet, Hyundai managed to increase its market share and boost sales in the US. How? They choose to listen to their customers and address their concerns.
Hyundai realized that some consumers in the US were unwilling to buy new cars due to the fear of losing their job. The automaker introduced their famous “Job Loss Protection Program.” The initiative enabled buyers to return their vehicle within a year without paying further installments.
That’s it; customers realized the car maker cares about the situation. They were able to buy new vehicles without worrying about the future. Hyundai earned several lifelong brand fanatics.
Guaranteed long-term business profitability
Customer loyalty has a lot to offer in the long term. Researchers from Bain & Company monitored the spending habits of consumers. They concluded that customers spent 67 percent more post 31 months of association with online retailers. Shoppers buying groceries from physical stores spent 23 percent more post 31 months. So, there’s a vast difference between the first month and the 31st-month bill. Loyal consumers tend to spend more down the line.
Yet again, it is clear that retaining and nurturing relationships with existing consumers can offer good results in the long term.
Quick tips to get the best out of loyalty programs:
- Paid loyalty programs can yield better results.
- Offer many channels of communication to consumers.
- If you cannot improve the products immediately, it’s better to drop prices to compete.
- Provide benefits that can differentiate your brand.
- Offer access to exclusive products or services via customer loyalty programs.
Guest Article by Rakshit Hirapara
Rakshit Hirapara is a professional content marketer at LoyaltyXpert. He holds spectacular skills in loyalty programs, customer retention, loyalty marketing, digital marketing and many more.