On the surface, loyalty might seem like an extensive — and expensive — undertaking. But dig a little deeper, and you’ll see it has the potential to boost your bottom line. Members of loyalty programs spend an average of $42.33 more with retailers than non-members and generate 12 to 18% more revenue.
But achieving loyalty with your customers can reward your business in numerous ways. A significant portion of the added value comes in the form of data gleaned from your most loyal customers. That information gives you an inside look at their preferences, purchases, and so much more — opening the door for stronger connections with your customers and even higher ROI.
But how exactly can loyalty boost your business’ bottom line? Let us count (a few of) the ways:
1. Attract and retain customers
First and foremost, loyalty programs help attract new customers with the promise of rewards and discounts. Leverage all of your available channels (email, in-store, social media) to connect with new customers. And don’t overlook the power of word-of-mouth — 83% of consumers are more likely to act on the recommendations of friends and family than other sources. Use incentives and rewards to encourage current members to send new customers your brand’s way.
And once you have new customers on board, it’s critical to retain them. Customer retention is crucial to maintaining and growing revenue. Increasing your retention rate by just 5% can boost profits 25 to 95%. And the deeper the connection, the higher the spend. Emotionally-connected customers are twice as valuable as highly satisfied customers, according to Harvard Business Review. When you keep customers coming back for more, you don’t have to put as much time and budget toward acquiring new ones.
2. Motivate engagement
Loyalty opens a whole new toolbox of customer insights and channels through for engaging your audience. Mine profile preferences, purchase histories, and social media activity to create ideal engagement opportunities with each of your customers. For example, if you know customer A has a history of visiting your locations on Wednesdays and has a high email open rate, make sure you send those discounts and coupons to their inbox ahead of their mid-week visits.
Strategic segmentation like this can help you become not just a source for products or services, but also a trusted and invaluable resource customers can’t live without. Providing a positive experience for customers is a win for you, too: per Gallup, fully-engaged customers represent a 23% premium in terms of profitability and relationship growth over the average customer.
3. Create personalized customer interactions
When you speak directly to a customer’s needs, behaviors, preferences, and interests, you strengthen that personal connection. And you know what motivates more purchases? You guessed it — personalization.
With the help of member data, loyalty programs also enable brands to communicate more frequently and more personally with their customers. And customers appreciate the effort, with 79% reporting they’re very satisfied with highly personalized loyalty programs. You’re already collecting data, so savvy marketers will use it to their advantage by sending customers relevant, contextual, and timely offers that encourage them to make even more purchases from your brand.
Developing a loyalty program that personally engages members with relevant offers takes a larger upfront investment, but also results in a higher ROI. Make sure your loyalty program is simple, user-friendly and has the content and appeal your customers want — and expect — from their favorite brands. Check out our loyalty capabilities to how we can help you develop lasting relationships and drive your business forward.