How to Run Customer Loyalty programs
- October 7, 2021
- Posted by: Scale My Hustle
- Category: Customer Retention
While attracting new customers is essential for all businesses, it’s equally as important to make sure you’re retaining existing customers. There are many effective customer retention techniques, but today we’re focusing on customer loyalty programs.
What are customer loyalty programs, and how do you create one? This post will give you a run-down on the basics of customer loyalty programs, how they work, and how you can use them to retain more customers for your business.
Customer loyalty programs are a great local advertising idea because they increase customer retention. But why is that so important?
Why is Customer Loyalty So Important?
1. Customer loyalty leads to increased profits
Customer loyalty and retention has a multitude of benefits. The rule of 80/20 states that 20% of a company’s existing customer base generates 80% of its profits! Just a slight increase in customer loyalty can dramatically increase your profits.
Customers aren’t just direct sources of profit, but potential promoters, as well. Plus, it costs less to retain a current customer than it does to acquire a new one.
2. Customer loyalty can contribute to reduced marketing costs.
The customer buying journey begins long before they make an actual purchase. Consumers pretty much always engage in some form of research before purchasing a product or service, either by reading reviews or seeking advice from a current customer.
The more loyal customers you have, the more positive feedback will be available to prospects, and the lower your marketing and advertising costs may be. Word-of-mouth promotion is a powerful marketing tool.
3. Customer loyalty can translate to increased customer satisfaction.
Repeat customers also offer another invaluable benefit: brand insight. Repeat customers will provide honest feedback based on experience. This feedback can be used to improve your business, increase customer satisfaction and bring increased revenue.
4. Customer loyalty can help your business become resilient.
Lastly, building customer retention and loyalty will help insulate your business from competitors. Loyal customers will stick to the brand they trust regardless of economic changes.
Loyal customers, as long as they are kept satisfied by your service, will keep bringing money to your business, even if a trendy new brand comes to the market.
What are Customer Loyalty Programs?
Customer loyalty programs offer participating customers rewards or special benefits for their purchases that aren’t available to non-participating customers. They’re designed to incentivize repeat business and may come in the form of loyalty cards, keychain fobs, stickers, or even paper punch cards.
For customers, a loyalty program may be free to sign up for or may have an entry or yearly fee. For businesses, your loyalty program may cost you nothing or might require a small investment.
Customer loyalty programs combine humanity’s competitive nature with the consumer’s love of receiving free stuff. The customer is made happy by their reward, while the hosting business rakes in more profits and gains that customer’s allegiance, building customer loyalty.
Featured image: istockphoto
Article culled from localiq