Two benefits of a loyalty program
Customer loyalty is our favorite topic! And two of the main benefits of a loyalty program is customer retention and personalization. But there are of course other benefits with a customer focused approach. A loyalty program increases overall revenues by 5-10%! And on average, a member spends 5-20% more than a non-member and visits you 5-20% more frequently*. This is great! But, spare a few minutes to read about some more benefits below.
Other key benefits of a loyalty program
Customer data – the new oil
Loyalty programs and/or identified customers provides your company with deep knowledge about customer profiles. Such as their behavior, buying habits, and preferences – a 360 degree view. Data can be used to increase personalization, segmentation, and tailored offerings. A variety of departments can profit from available data since it can be used as input for product development, pricing, marketing campaigns, or range development.
Read more: What is a retail customer data platform?
Customer Retention – There must be a reason to come back
Thanks to good customer understanding, you will always be one step ahead and adapt your offering to your customers’ needs and preferences. Process customer data to adapt the content and tone of voice to inspire and influence them to make the next purchase. If you know what the customer needs before they do, you have a good chance of providing a great customer experience! That leads to retention in the end.
Customer Lifetime Value – Engagement and satisfaction
Thanks to available data you can identify customer lifetime value, segments, and tailor the offering. Smart utilization of data enables you to find cross- and up-sell opportunities. Once a new member has been on-boarded, your mission is to motivate them to make another purchase and increase both frequencies and spend.
Up- and cross sell is not only about selling more products but also about broadening customer engagement in all channels. Identify offline visitors and make them interested in exploring the online offer. And the other way around. Online shoppers must understand the advantage of a store visit.
Did you know that multichannel shoppers spend 3 times more than single channel shoppers, and customers who engage on multiple channels visit stores 23% more often**? A sufficient reason to push for a multichannel engagement.
Personal relationships – A win-win situation
Brands that create personalized experiences are seeing revenue increase by 6 to 10 %. That’s 2-3 times faster than those that don’t***
A loyalty program offers a direct line to customers, making communication much easier. Once again – customer data is the key to success. Tailor newsletters and landing pages to improve the experience. Information such as abandoned carts, clicks, and product recommendations should not be isolated for online visitors only. Customer data must also be available and actionable in-store. Enable an excellent customer experience, and personal offers by providing the staff with the required tools and understanding of their contribution to success.
44% of customers who have had personalized experiences are likely to become repeat buyers, and they have a 3x greater lifetime value.**
Identify discerning customers – Win-back strategies are required
You might have a large member base, but do you know how many of your customers are active buyers? A large number of inactive members cost more than it brings. Identify the segments by a simple “have not purchased in x months model” or churn score analysis. Then re-activate them before it is too late. Research out of the Harvard Business School has shown that even a modest 5% increase in customer retention can increase profits by up to 95%. Remember to personalize the re-activation initiatives to increase the chance of inactive customers reacting positively to your offering. Don’t wait too long before activating the campaigns. The longer it’s been since each customer slipped away, the harder it gets to reactivate them.
**BI Intelligence Jan 2017, Euro IT Group 2016, Harvard Business Review 2017
*** Boston Consulting Group, May 2017