4 Main Reasons To Implement Loyalty Program Into Business
What is Customer Loyalty?
Loyalty is how customers trust and repeat to think and buy business products and services.
Customer loyalty is a relationship between a customer and a business in that customers are willing to repeat their purchase behavior or frequently engage with businesses. No matter how many brands and competitors are over there, they still choose your business as one of the number one priorities.
One approach to loyalty is to consider it in the context of the brand. People are loyal to a brand due to positive experiences, such as excellent customer service, a strong sense of connection to the brand's values and ideals, or consistently high product quality.
It's not about a single product or service; loyalty develops over time as a result of a series of positive interactions that foster a sense of trust. It also does not imply that every interaction has to be flawless.
“78% of consumers are more likely to buy from a brand with a loyalty program” - Salesforce Research, 2019
Another study shows that More than 90% of companies have a variation of loyalty programs. This number also states that almost all businesses are likely to implement Loyalty Program to gain market share and prove the importance of this tactic.
So, what's the reason why the Loyalty Program is so imperative to businesses? Let’s take a look at how it works first!
How do customer loyalty programs work?
The best way to show someone that you care about them without going overboard is by giving them customized presents or small tokens of appreciation from far and near. Loyalty Program is implemented to pursue that psychological satisfaction of customers, to show your gratitude for their continued support and loyalty.
Loyalty Programs work by rewarding customers repeatedly shopping, transacting, or just interacting with a brand. This is a valuable customer sort that can contribute a large revenue to the business. So, a retention strategy to motivate their repeat purchases, and build trusted bonds between customer and brand is crucial to each company.
This program can be launched from simple, like a physical card with blank boxes, every time your customer shops back, you can give them a sticker or stamp to fill a blank box, each filled box can be counted as 1 point or a gift, it’s up to your reward strategy.
With a company that has a large number of customers, keeping these connections can be more complicated and should be taken into account. Therefore, almost all businesses apply Digital Loyalty Program Solution into their strategy for better CRM (Customer Relationship Management) and customer experience. Here is some reason why loyalty programs can make a big difference to business:
1.Deliver And Keep Your Customer Engagement
Acquiring new potential customers and expanding customer reach is a never-ending race for every business. But, we can not deny that existing and loyal customers are a group that can bring the highest profit to your company.
“Acquiring a new customer can cost five times more than retaining an existing customer.”
Loyal customers are willing to spend up to 67% more on average than new ones. This is an entirely possible statement. According to the Pareto principle (The 80/20 rule), for many outcomes, roughly 80% of consequences come from 20% of causes. In other words, just a small percentage of your consumers (20%) could have an outsized effect. And that minority customer group connections need to be strengthened and highly supported. The Loyalty Program is made to retain this valuable engagement.
Existing customers are likely ready to try your new product and even give less care about pricing than new customers. However, the bigger their emotional relationship to your brand, the more benefits they want to get. The Loyalty Program is the solution to build up and nourish this bond.
For example, you can recognize your existing customer as a VIP, Premium, or another title that makes them feel different. And loyalty programs can assist you in managing your customer assortment to have customized benefits and incentives that encourage their engagement, which contribute to retaining them.
2.Provide Valuable Customer Insights
Not only just retaining your customers, but a loyalty program can also help you in knowing them more through their insights from data that the loyalty program collects.
With real-time customer data sources such as order history, site activity, visits, or referral, you can easily take several advantages and take a lot of actions:
- Understand customer’s unique buying habits:
For some reason, your buyer can share with your business their needs and what makes them decide to purchase your product or not. With data, it is easier to follow their decision, every step they take before payment, and understand their emotions when buying. Hence, customer loyalty managers can take action to improve the product, loyalty programs, and marketing strategy, or tailor your service to encourage them to make purchase decisions faster and easier.
- Meet the needs of specific customer groups:
There are different customer segments accompanying your business. We can apply only one program to all of them. Loyalty programs can help us build detailed customer profiles and understand nuances. Therefore, it is easier to attribute particular sales to specific segments or groups. In other words, we can connect to our customers on an individual level.
- Account CLV is for each of your customers
Customer lifetime value (CLV) can be easily understood as the entire value of the average customer to business throughout their business relationship.
The customer value must be calculated in gross revenue terms, which is exceptional for customer acquisition costs (CAC), such as sales, marketing, operating, product manufacturing expenses as well as the cost of service the company offers.
This statistic is no longer easier with a loyalty program that can analyze and work out exactly what the CLV is from customer data. By approaching this valuable metric, you can optimize your loyalty strategy in the near term and long term to retain your existing customer, by offering more unique rewards periodically, which nourish your customer engagement to accompany longer.
3. Boost Brand Advocates
In a study of Forbes, they showed that:
“81% shoppers research products, compare prices and read reviews before making their purchases.“
This fact means customers are more and more careful and difficult in deciding to buy one. But with a smart loyalty program, businesses can gain competitive advantages by creating brand advocates.
WOM (Word-of-mouth) is never an unreliable channel to customers. We are likely to trust and refer to the one close to us such as friends, family, or those we appreciate and follow on social media like idols, influencers, inspirational persons,... So the point is to make your valuable customers aren’t typically the ones who spend money but can spread your brand closer to the people around them.
In social psychology, there’s a social norm that we can apply for a loyalty program to achieve your brand advocates called Reciprocity.
Reciprocity is a process of exchanging things or interacting with other people to gain a mutual benefit. If one gives a friendly or rewarding offer, the other will positively respond and be more likely to ‘return the favor. That also means when your customer receives a positive offer from your brand, for example rewarding or an attractive loyalty program, they are willing to do something back in return not just visits, purchases but also referrals., By spreading your brand through their relations, you will gain new potential customers that can make quick decisions to purchase thanks to WOM recommendations. This can be a valuable customer sort in the future that you don’t need to spend much time and cost for approaching them.
4. Implement A Loyalty Program Has Never Been Easier
You can first start your business’s loyalty program with some small campaigns like physical cards for accumulating points. But if you want a well-planned and strategic program, you should be sure of what your loyalty looks like and its main purpose? How long do you want to launch this program, long-term or short-term? Your budget spending for this program? Is your idea appropriate to your brand and attractive enough to customers?... If you are considering how to clarify those needs, don't worry, ITC advisors are here to identify requirements and make your scope clearer.
When having a clear scope of your ideal loyalty program, choose a solution to launch your loyalty program due to insights from answering those questions. Loyalty programs had better managed and coordinated on digital platforms because with a large customer data and different programs, you might struggle in handling traditionally.
Fortunately, many outsourcing services can help you build and develop your loyalty program platform. In this innovative firm, ITC Group takes pride in having mature experience from cooperating with Customer Loyalty, a visionary technology platform for loyalty programs that was highly appreciated by both users and experts in the field of Customer Success Software.
With more than 10-year-experience advisors, we provide a variety of solutions and programs including Promotion & Gamification Loyalty, Personalize Loyalty Offers, Rewards Based Engagement, Gifts and Incentives Strategies, and Cost-effective Loyalty Programs.
Mr. Eric T
CTO | UpDiagram
"Based on the expectation of a long-term and growing partnership, customer loyalty is a great tool in customer satisfaction management and a worthwhile investment. The IT team has succeeded in creating practical value, elevating the customer experience when customized and personalized while ensuring a bridge to communicate with and understand customers in reality."
If you have any loyalty program idea that comes to your mind or a well-planned one, don’t hesitate to talk to us. With our dedicated and skillful team in the software development firm, we hope to be your trusted partner that helps your loyalty program implement, and achieve business goals. Contact us for further information and consulting.