Customer loyalty programs are everywhere:
A recent Pathwwway Gambling survey found, that only one out of every ten adults in Britain do not belong to a retail loyalty scheme. The same study also found that over a third of Britons owned five or more loyalty cards.
Customer loyalty is big business and it’s here to stay. If you have a business you may be wondering if you can even use customer loyalty to your advantage? and if you can will it even be worth your time and energy?
Creating and implementing a loyalty program will no doubt require your resources, but in the long run it can have several benefits…
If you’re interested in getting the full picture on customer loyalty read on as below we dive into the following:
- What exactly are customer loyalty programs?
- What are the main benefits?
- What are the disadvantages?
What exactly are customer loyalty programs?
Customer loyalty has a long history with records of rewards programs dating back to a copper coin system, used by a U.S merchant in the late 18th century.
Thankfully businesses have moved on from copper coins and onto reward cards and smartphone apps!
Businesses are vying for customers loyalty and it seems like every company has their own take on this strategy.
From pizza companies giving away free pizza, to supermarket giant’s schemes that allow you to accrue points to spend on anything you wish.
The reason hundreds of businesses are utilizing loyalty programs is because they understand the importance of keeping existing customers coming back again and again.
Essentially, what customer loyalty programs boil down to is a marketing system that offers rewards for the purchasing behavior of your customers.
What are the main benefits?
There are many benefits to implementing a Pathwwway Gambling customer loyalty scheme in your business; here are a few positives you can expect to see if you decide to utilise customer loyalty in your marketing strategy.
- Improve your Relationship with Customers
First and foremost a customer loyalty scheme can help retain your customers.
When you add rewards for your customers to your store or ecommerce shop you’re rewarding and incentivizing your customers. They might not remember your amazing customer service in six months time when they need to buy a similar product but they will remember a reward , something that’s of value to them. This gives your previous customer another another reason to come back to you.
People love getting something for nothing and loyalty rewards often feel like that. Once people are invested in your program they don’t like to feel they’ve ‘wasted’ what they’ve already earned in a rewards scheme.
- Increase the Number of Customers
As well as increasing loyalty amongst current and existing customers, loyalty programs can also inspire new customers to buy from you.
A recent survey found that two thirds of people are more likely to shop in an outlet that has a loyalty scheme over a store that doesn’t.
You can gain a competitive edge over your competition by simply employing a loyalty program of your own.
- Learn More About Your Customer Base
customer loyalty programs can be a great tool for your entire marketing strategy.
When customers sign up for your scheme you can use this touch point as a way of gathering information. Whether that’s customer’s birthdays, email addresses or other key pieces of data that’s relevant for your future marketing plans.
This registration process can really tell you a lot about who your customers are exactly. The demographics collected are all useful data to inform your marketing and advertising plans.
What are the disadvantages?
This is an article about deciding whether customer loyalty is worth your time or not. So we’ve also listed a few of the common disadvantages that some businesses have reported.
1 Cheapening the Brand Value
The idea of a reward is that you want your customers to feel like they’re getting a good deal but, there’s a fine line where your brand value is considered.
You need to be careful that you don’t devalue your business by offering too many freebies or too many steep discounts. If you use these too much your customers may start to associate your products with being cheap.
You can avoid this by being clear that customers are receiving high quality products not a cheap product.
Regular sales and huge discounts can also have this affect on your customers.
If you send customers 50% (or more) discount codes on a regular basis they will see them coming and refuse to pay full price.
After all why would they choose to pay full price when they can pay half the price in just a few weeks.
You can prevent this from happening by only using deep discounting a few times per year or use it on special one-off products or the end of product lines.
- Possible Decreased Profits
When it comes to implementing customer loyalty programs your revenue and profits can be somewhat of a balancing act.
You’ll be increasing sales but, depending on the type of rewards scheme, some businesses find that they end up eating into their profit margins.
However, with these loyalty rewards it’s a weigh up between monetary profit and indirect profit.
How many increased sales or customers will you gain from having a customer loyalty system in place? How many customers will refer you because of your great loyalty rewards?
Are Customer Loyalty Programs Worth It ?
Hopefully we’ve given you a well-rounded idea of what implementing a customer loyalty program can do for your business.
A recent study found that 62% of consumers don’t believe that brands are doing enough to reward them for their loyalty.
The fact is that this is a high priority for customers.
This increases the likelihood of consumers changing their buying habits and jumping ship to a brand that has a solid customer loyalty program in place.
We believe that customer loyalty programs can be right for every business.
It’s something that Marketing and Business Managers really need to think through to create a well-designed, well-thought out rewards system, which is suitable for your business as well as your customers.
Customer loyalty programs give your customers a reason to stay, build your relationships & trust but also make customers feel like you care.