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The 9 benefits of innovative B2C loyalty programs
Many companies are finding it difficult to remain competitive in today’s market. Product differentiation just doesn’t cut it anymore as companies can easily make knockoffs to try to undersell competitors. Under these circumstances, companies have to keep customers loyal to their brand and find new and innovative ways to retain them to ensure company growth.
Loyalty marketing professionals that institute innovative and engaging customer loyalty programs yield important benefits for their companies:
Boost growth and sales.
A loyalty program gives companies access to valuable customer information allowing them to correctly segment and deliver valuable content to each segment. This, in turn, will increase customer retention levels and, by extension, revenue.
Engage your customers.
Customers find loyalty programs valuable because they gain rewards and discounts, and feel that the company is tailoring offers based on their particular needs and interests. With the right technology, companies can tailor a program to fit their customers’ needs, deliver the right solutions and rewards, increase customer loyalty, and ultimately drive revenue.
Leverage more profitable customers. Some important stats to consider:
- Loyalty programs can increase revenue by 5-10%.
- Loyal customers spend 5-20% more than non-loyal or new customers.
- Loyalty program members buy 5-20% more frequently.
- Keeping an already existing customer can be 7 times cheaper than securing a new one.
Improve your company reputation.
The best form of advertising out there is word-of-mouth. Studies have shown that it is the primary factor for 20-50% of all purchase decisions. A fully functional loyalty program helps increase your reputation and chances of being recommended to other customers. This is because if customers feel more acknowledged, they will be more satisfied with your brand. Innovative loyalty programs offer a refer-a-friend incentive, rewarding both the referrer and referral, making the program more effective.
Enable you to stop competing on price with competitors.
Loyalty programs give you a larger competitive edge by adding a valuable differentiation for your customers. Considering today’s highly competitive market, loyalty programs help you differentiate yourself from competitors on factors other than price, helping you maintain customers’ loyalty as you are offering them something special. They allow you to surprise and delight your customers by giving them valuable content and personalized rewards.
Provide you with relevant customer data and consumer trends.
Every time someone registers into your loyalty program, customer data gets recorded to your database. This data is a valuable asset that helps you create the right segments for custom offerings, and understand your customers’ needs, interests and purchase patterns/behaviors; and ensures you remain valuable to your base. Basically, this data will allow you to invigorate inventory management, pricing, and promotion planning, making your program more efficient and profitable.
Address unprofitable customers.
As mentioned before, a loyalty program with robust analytics allows for a well segmented database of customers. This helps you recognize the more profitable and unprofitable customers — and deal with the unprofitable ones accordingly, as they typically cost the company more money than they generate, while rewarding the more profitable clients.
Attract new customers.
A loyalty program that delivers value to the customer is a differentiation point for a company. By rewarding points and discounts for sign-up, profile completion, and referrals, your company will attract new customers. They will choose your brand thanks to the rewards you offer.
Effect better customer communications.
A loyalty program offers a direct line of communication to customers. Not only will you be able to announce new products, promotions, sales, and discounts, but you will also be able to address issues such as product recalls, and be able to contact customers who bought that product directly.