Loyalty programs can be a great way to generate loyalty and promote customer loyalty.
If executed well and with the customer at the centre, loyalty programs can help your customers feel good about purchasing from you. You can use many types of customer loyalty programs to increase customer engagement. What you choose depends upon your mission, your product, and your goals for the reward program.
By creating a comprehensive loyalty program that allows for modern marketing techniques, you can turn your customers into advocates for your brand. Since modern consumers trust peers over advertising, fostering loyal customers who will then speak out on your behalf is simply a smart business move.
In recent years, more brands have started to think about how best to encourage and reward customer loyalty. And it’s one reason why those brands are investing more money into their loyalty and rewards programs. If it’s something that you’re thinking about doing, you should know exactly what a loyalty program is before getting started.
Loyalty programs can have a negative effect on customer retention.
There is no doubt that the benefits of loyalty programs outweigh the disadvantages. If you carefully and strategically launch a loyalty program in the market, surely you will generate profitability. All you need is expert advice and marketing agendas to market your program, and you will be able to retain more loyal customers with a customer loyalty program.
Loyalty programs make customers feel valued, which entices them to continue doing business with your product or service. Generally, loyalty programs are designed to retain more customers by rewarding them to make repeat purchases with a particular brand. In fact, according to a study, it costs up to 7x more to acquire a new customer rather than nurturing the existing customer. Hence, most marketers design a loyalty program to increase customer retention and incentivize additional purchases.
Increased Customer Retention – Data shows that 84% of customers say they’re more likely to stick with a brand that offers a loyalty program, and 66% of customers say the ability to earn rewards actually changes their spending behaviour. One of the prime advantages of a loyalty program is that it has an immediate and evident impact on the customer retention rate. A retained customer is an asset to any brand, they bring more revenue, have more chances of becoming brand advocates and represent the brand as a true brand loyalist.
Loyalty programs can have a negative effect on customer satisfaction.
Have you ever joined a loyalty program purely out of convenience, but after a few purchases you start to realize that you are not even earning enough points to obtain the rewards you really want? If the answer is yes, then you have already experienced one of the reasons why many loyalty programs fail to engage their users.
Poor data integration. Many customer loyalty card programs focus on rewarding customers for spending a specific amount at a store and do not collect detailed information about the customer and his purchases. By limiting the information you collect about your program participants, you’re losing valuable opportunities to analyze trends and insights in your marketing and sales efforts, as well as the opportunity to market directly to customers through email, text, and mail correspondence.
In each instance above, there is the potential for far-reaching problems in an organization. With respect to derailing a customer loyalty program, if your employees don’t feel that they are part of the success and mission of the company and cannot embrace the enthusiasm to create a positive customer experience, it’s an uphill battle from there to create loyalty.
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