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Loyal Customers: How to Keep them Coming Back

Loyalty Programs Stats Need to Know

From a business perspective, it makes sense to focus your resources on retaining and growing customer relationships as it usually costs more to acquire customers than to keep them. But with consumers having more information, more and more control over the buying process, brands must dedicate more resources to engage, keep and grow their customer relationships. Many brands are accomplishing this through the use of loyalty programs. And if you look at the statistics, it makes perfect sense:

  • 75% of consumers say loyalty programs are part of their relationship with brands. [1]
  • 73% of loyalty programs members are more likely to recommend brands with good loyalty programs, which equates to a boost in member acquisition and reduced marketing spend. [1]
  • The return on loyalty program investment is higher than ever. Engaged consumers buy 90% more frequently, spend 60% more per transaction and are five times more likely to indicate it is the only brand they would purchase in the future. All of these factors lead to engaged customers delivering three times the value to the brand over the course of a year. [2]

The benefits of loyalty programs are clear, but it needs to be said that consumers that take part in loyalty programs are only active in around half of the ones they’ve joined. The question is: how can you create a loyalty program that engages your customers and keeps them coming back?

5 Steps to Designing and Implementing Your Loyalty Program

Step 1: Be Crystal Clear about Your Objectives

In general, loyalty programs are often developed with good intentions, but unclear objectives. This can sabotage your program from the start. A program cannot be mass and exclusive, loaded with benefits and cheap. Take a critical look at your primary business objectives. Do you want to retain existing customers? Acquire new customers? Improve the customer experience? Successful program execution is based on developing and implementing a program that supports your primary business objective.

Step 2: Build a Program Around the Customers that Create Value

One of the things you have to realize is that some customers are more valuable than others.

When customers enroll in a loyalty program, they allow companies to collect valuable profile, preference, and behavioral data that companies should use to uniquely recognize, reward, and communicate with them. Segment your customers and prioritize them to focus on their potential economic impact. Avoid rewarding “ free riders” — loyalty members that join your program, but give you nothing in return, and instead focus your efforts on profitable, loyal customers.

Step 3: Determine the Best Value Proposition and Program Structure

If you’ve identified your best and potential long-term customers, it’s easier to figure out a value proposition that makes sense. You want to offer rewards and benefits that are attractive to them and has a high perceived value. While discounts are important to some customers, for others advance notice of sales, personal attention and convenience are the factors that create loyalty. Your customers are diverse, consequently, your program needs to acknowledge these unique customers attitudes, behavioral drivers, and needs by speaking differently to each of them.

You want to ensure that you engage the right customers, make it easy for them to enroll in your program, make it easy to use your program, and clearly communicate how the program works.

Step 4: Create Compelling and Meaningful Communications

In order to engage your customers, effective communication is a must. You need to study customer behavior (CRM analytics and data will help immensely) as well as look into the demographics. Create offers that add value, reach out when it makes sense, and showcase the right products. It also helps to personalize your communication if possible.

Step 5: Identify Metrics to Evaluate and Measure Loyalty Programs

Like all your other channels and marketing strategies, it’s important to pay attention to the metrics to understand what’s going on and get an idea of what to do differently to make improvements. It’s especially important to see if your program is meeting your goals.

Do’s and Don’ts for Creating a Best-in-Class Loyalty Program

DO differentiate members by value. Focus your resources on your best customers and make sure you clearly communicate they’re getting exclusive rewards/benefits for their customer loyalty.

DO mobilize. Having a mobile-friendly site, implementing mobile marketing, and using mobile apps will be a big part of engaging with and marketing to your customers.

DON’T make things complex. Simplicity is what gets people to take action and take part in what you have to offer.

DON’T focus solely on sales and revenue numbers. Customer loyalty can lead to the growth of your brand, give you a better understanding of your audience, and help differentiate your brand in a competitive marketplace.

To sum up, nurturing customer loyalty is one of the best ways to maintain and grow your business. To create a truly effective loyalty program marketers need to authentically fulfill the customer’s needs, recognize and reward both customer loyalty and engagement.

SOURCES: 1. Bond, 2016, 2. Rosetta, 2014

Looking for proven loyalty marketing and rewards program strategies? What’s working? What are the trends? Customer Insight Group is an industry leader in rewards programs and customer loyalty strategy and we can help. Check out these resources:

Loyalty Workshops
Loyalty Marketing Infographics
White Papers & EBooks