What are the benefits of a Customer Loyalty Scheme?

Over the past year, many businesses have come to realise that retaining customers is just as important as acquiring new ones. The pandemic has altered many customers’ behaviour, resulting in them becoming more selective when it comes to value and loyalty. To get ahead and turn customers into ‘brand loyalists’ business will require a repeatable process that incentivises them.

If you put customer preferences at the heart of your marketing efforts and execute a programme well, customers will feel good about your brand and that will give your business a competitive edge against your competitors.

Why Are Loyalty Programmes Important?

A loyalty programme is often overlooked in terms of customer experience; however, when they are done well they can be a key player in building relationships, understanding your customers, and a way to make customers’ brand purchasing experience better, as well as of course building loyalty.

Customer loyalty programmes play a huge role in retaining customers, according to a 2020 Forbes article ‘79% of consumers say loyalty programs make them more likely to continue doing business with brands.’ (Bond). Loyalty programmes work because they make your customers feel recognised and special which leads to retention, referral, and profits.

What Are The Benefits?

Customer Retention

According to the Harvard Business School, routine customers spend on average 67% more than new customers. It is well known that acquiring new customers can be more expensive than retaining an existing customer and loyalty programmes are an effective way of keeping them. Having such a programme can also maximise the lifetime value of a customer by offering incentives to spend more and buy more often.

Creates Brand Advocates

Not only can loyalty programmes retain customers they can also turn your customers into brand advocates. A happy and loyal customer will tell others about your brand which in turn will result in acquiring new customers through word of mouth and without spending on marketing.

Nielsen states that ‘92% of consumers believe recommendations from friends and family over all forms of advertising’. Therefore a loyalty scheme can generate more revenue for your business by customer referrals.

Increase Sales

When a loyalty programme is done properly it gives customers a reason to come back to you. If you inspire and incentivise customers they will be keen to continue interacting with a brand they feel connected to.

Customers participating in loyalty programmes will be aiming to gain something such as a prize, holiday or monetary voucher and when customers know they are close to achieving these prizes they will end up purchasing more to redeem their benefit sooner.

Supports Your Strategy

Loyalty programmes can be tracked through analytic reports that can provide important retention metrics such as programme engagement, repeat customer rate, and purchase frequency. Measuring these metrics will help you understand how your loyalty programme is supporting the number of repeat purchases every year. Increasing your repeat purchases involves strategy and a loyalty programme is the best way to support it.

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