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How do loyalty programs work?

Advocado — Wed, 09 Jan 2019 08:32:00 +0000

Loyalty programs have proven to be an efficient marketing tool in driving businesses to the zenith via customer satisfaction. They make customers happy with exciting rewards and then remind them to come back and redeem the rewards. Hence, when executed correctly, they bring customers back to businesses again and again, maximizing the return visits and sales revenue.

For many businesses, convincing clients to come back is the hardest hurdle one must overcome to succeed. Loyalty programs are also tools for understanding the behavioral and attitudinal features of the customer. There are ways to reward a customer, but the best and most effective way is a loyalty program.

When employed appropriately, loyalty programs can trigger a repeated purchase and turn first-time buyers to brand loyalists. Giving back to your customers is incredible, but with trust dwindling, it begs the question; does a loyalty program work?

So in this article, we will be discussing everything loyalty programs, including benefits, impact on retaining customers, types of loyalty programs, and how they work?

So if you are ready, let’s get in the business.

What is a customer loyalty program?

The ability to endear your customers to return again and again is customer loyalty. A strategy put in place to ensure they return for your product and service is the loyalty program. The main reason for a loyalty program is to build a customer base that can help you grow your business.

Loyalty programs have been around for more than three decades with the ‘Frequent flyer program’ introduced by American Airlines. It was to give the frequent flyer more attention than the rest. Today, loyalty programs have extended to travels, vacations, shopping, rentals, financial services, and everything else.

With that said, loyalty programs are marketing strategies that aim to make customers more loyal by developing an open and personal relationship with them.

Why is a loyalty program so crucial to a growing business?

Loyalty programs are marketing options that companies should employ to build loyal customers. The idea is to boost brand recognition and keep the customers happy while driving revenue up.

Loyalty programs are great at converting customers, increasing their spending and loyalty to the brand. It is also a passive system of marketing via word-of-mouth. So if one person is satisfied, they will tell their friends and family members, creating more profit for the business.

Other benefits are:-

Increases customer retention – Customers will stick to your brand if they are getting good value and appreciation for their loyalty
Customers feel valued and loved by the brand
Improved brands recognition and reputation
It is a great way to win back customer and welcome first-timers
It stimulates customers to spend more and gain more loyalty reward
It enables brands to build loyal customer bases anywhere they establish
Provides detailed insight to sections of the business that needs more work to improve
Allows brand to create advocate from their loyal customer to speak on behalf of the brand like influencers
Increased customer-brand interaction

Types of loyalty programs and how they work

While we know loyalty programs work, companies need to determine which one is best for them. Below are types of loyalty programs and how it works.

This type of program encourage customers to buy more for a reward. For example, the buy two get the third free increases sales but allows customers to feel rewarded for their efforts dealing with you. It is the simplest loyalty program and the easiest to build a loyal base with increase referral.

So if you are looking to boost sales or introduce yourself to the world, this is the loyalty program for your brand. The only disadvantage to this program is the inability to collect customer information to alert them to another get free/reward program in the future.

In this type, customers get points for purchasing or spending a stipulated amount in a business. These points are then exchanged for rewards or items at the store or listed out by the companies.

In some instances, customers gather points throughout the year for a movie premiere, retreats date for two or a day at the spa. To keep such a loyalty program going, companies should surprise loyal customers with gifts or rewards to keep them interested in gathering points.

Now, most customers love this type of reward program. Customers under this loyalty platform earn cashback when they reach a stipulated spending limit; they are gifted money back. This extra cash gift can be spent immediately or used or something in the future. The cashback loyalty program encourages more spending and is a remarkable way for stores with large or frequent customers.

This tests the patience and loyalty of the customers. In this program, the more points they get, the higher their loyalty level. So once the customers gain a particular point, they are more recognized by the company. The tiered program works exceptionally well as motivating customers in the lower tiers to purchase more and get better rewards.

This is a fun competition that allows customers to engage in a game-like scenario. It will gain the customer points, cash, or reward.

For example, a customer buys a newly introduced product at twice the point of another previous favorite. It strengthens the brand’s image, and it is an entertaining way to cut advertising costs and gain more customers.

Other loyalty programs are the hybrid program, paid program, VVIP paid loyalty program, partnership program, etc.

Loyalty programs work and are an effective marketing strategy to attract and retain new customers. Deciding which loyalty program is efficient for your brand or business will determine how much advantage you will have over your competitors. Note that regardless of the loyalty program of choice, the result is to increase sales, customer interaction, profits, and retention.

Remember, a loyalty program should always be about the customer first. The instructions must be clear enough for the customers to understand and participate in them.

So to answer your question, yes, loyalty programs work. And it is a strategic way to interact with customers.

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What Is The Importance Of Brand Loyalty In Marketing?

Advocado — Sat, 05 Jan 2019 09:59:00 +0000

The 21^st century is a fast-paced era that is not constrained by many boundaries. Ours is a free world, where we make our choices largely as free creatures. When something fascinates us, we try to hold on to it. But as soon as we find the next shiny thing, we tend to forget about our last favourite. Such is human nature.

However, this way of life that is practiced by common people is not very healthy if you view the situation from the perspective of someone who is a manufacturer or seller. This is why brand loyalty is crucial, and why it is a strategy that all smart marketers must follow! We shall discuss it in a little more detail in our next section.

What is brand loyalty?

Brand loyalty can simply be defined as the tendency of customers of purchasing products from the same brand over and over again, rather than switching to other choices. Loyal customers follow your brand and focus on buying from you, regardless of the costs or convenience. It is basically the representative of your customer’s commitment to using your services.

So, for example, consider you run a company that manufactures shoes, and 70% of your customer base returns to you for buying a new pair of shoes. Based on these figures, it can be said that you retain a good lot of your customers and that you have got yourself quite a followership.

Why is brand loyalty crucial?

Brand loyalty is an important concept in the world of marketing. Understand that presently we are living in a world where customers are flooded with choices. They have more alternatives available to them than they can try in one lifetime. So, when they come to you, it is not about their need but rather about a chance that you have got. Now it is up to you to convert that chance into an opportunity for your business by winning the loyalty of your customer. Only when you will have happy and loyal customers on your side, will you be able to survive the brutal cut-throat competition that is prevailing in the marketplace.

What is the power of brand loyalty?

Brand loyalty is a very old strategy used by marketers. When a brand thrives, it is mostly this factor that is responsible for its success. The figures that we have acquired from various sources are proof of the same-

Hubspot found in a survey that about 93% of the customers are more likely to purchase from a brand to which they are loyal.
One is required to make about 4 to 5 times more expenses in finding new customers than what he spends on retaining them.
According to the data by Brands Key, if you boost brand loyalty in your consumers by even 7%, you can shoot up your lifetime profits by 85% percent.
In that study, it was also revealed that increasing your brand loyalty by 3% can cut back your costs by 10%.
Current customers are likely to spend about 67% more on your brand as compared to new customers.
According to 65% of the consumers, if any brand offers them exceptional customer service, they are more likely to purchase from that brand again.

How can you make loyal customers?

Now that we have established that customer loyalty can ensure the survival of a business, let’s move to our next step, which is to determine how you can earn the allegiance of your customers.

If you wish to make a cult of customers that are loyal to your brand, then in order to do that you must offer your consumers quality goods. If your customer will get good products from your store, they will feel satisfied, which, in turn, will ensure their loyalty.

Just like quality products, good customer service also goes a long way in retaining consumers. So, if your brand will treat your customers in the right manner, hear their grievances in time, and solve their problems without giving them much trouble, their loyalty will be yours.

In the age of digitalization, it is not very hard to win the heart of your customers. You can easily create for them a reward program where they win a certain number of points for each purchase or recommendation. Your customers can later redeem these points when they make another purchase.

You can win your loyal customers by promising them certain benefits. You can create a loyalty app for this purpose which can be downloaded on a smartphone. So, every time your customer completes one step of the loyalty program, offer him some reward. This will ensure his return time and time again.

Conclusion:

Thus, in the present market, brand loyalty is a tool that can keep your sales soaring if you know how to use it. You can use the few options that we have suggested above to make it possible.

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