Have you seen competitors showing off their business loyalty program, and you want to get in on the action? That’s a great idea because business loyalty programs can increase customer retention, provide better services, and boost sales.
59% of survey respondents share that once they are loyal to a brand, they will be loyal for life. Think of the amount of upselling and sales you can generate from a single customer if they decide to stay with your brand for decades.
In this article you’ll learn why creating a loyalty program that offers value and incentives is important.
What is a Loyalty Program?
You might be wondering what a loyalty program is all about. It’s a way for businesses to provide exclusive discounts, rewards, promotions and giveaways to their customers. Most loyalty programs are free to enter, but you can also charge a fee if there is enough value. For instance, you can set up tiers that offer better rewards for a higher subscription price.
However, offering free loyalty programs will have the biggest subscriber rate. You’ll typically ask for an email address and basic personal details to enter the user into the loyalty program. As you’ll see in this article, there are many advantages to offering these that allow you to compete in fiercely contested marketplaces.
Increase Customer Retention
Acquiring customers is generally expensive because of the marketing effort involved. Therefore, your goal as a successful business should be to retain that customer for as long as possible. However, your competitors are likely to bombard your current customers with interesting marketing messages every day.
How do you combat this? Offering a loyalty program so compelling that they wouldn’t think about shopping elsewhere. For example, the program could have a structure where the quality of the rewards increases with spending. And, for every 3rd, 4th, or 5th purchase, you could offer something for free. This would cause buyers to stick with your brand because they would feel like working toward the goals of the loyalty program.
You can measure your customer retention before and after implementing the program. Or for customers that have signed up or are purchasing as guests. Then you can optimize the structure and quality of offers to increase retention.
Learn More About your Customers
Customers that repeatedly use your brand through a business loyalty program can provide a large amount of information about their buying habits. You can view their buying histories to determine their products of interest.
Using the collected data you can improve the targeting and relevancy of your offers, so you increase the conversion rate. Customers will appreciate brands that inform them about products they want to buy.
How to Create a Strong Loyalty Program
Now let’s take a look at the factors that determine the quality of a business loyalty program:
- Reward points: most brands offer reward points that have different names, but the idea is the same. It’s an in-house currency that can be accumulated and spent on products in the brand loyalty store. You’ll need to offer the right reward points to ensure customers are interested in accumulating them.
- Easy access: as mentioned previously, you can offer a free loyalty program or charge a fee. Removing the barriers to your program will increase the number of subscribers.
- Provide good value: offer products in the loyalty store that customers can get excited about. Also, there should be an element of targeting and choice so every customer can find something of interest.
- Easy to understand: make sure your customers can quickly understand the value and rules of the program. Otherwise, they might be put off from joining and look for other options that are easier to understand.
How to Make the Brand Loyalty Program Profitable
It’s important to calculate your loyalty program’s profitability so it’s viable long-term. For example, if you give away too much in the form of discounts, then it can hurt your business. Here are a few ideas you should consider when creating a profitable business brand loyalty program:
Track the ROI of each customer: using CRM (customer relationship management) you can keep track of various metrics on each customer. This includes the amount of marketing money spent on acquiring and keeping them engaged. Also, you can see the revenue generated from the customers to calculate overall profitability. Therefore, you can improve the quality of the ROI by fine-tuning the cost of promotional offers and products in your store.
Indirect value: it’s not enough to consider the upfront costs and direct ROI of each customer. That’s because loyalty programs can indirectly improve your business’s profitability. This includes word-of-mouth marketing from happy customers telling their social circles about the brand.
Set a budget: to avoid spending too much on your loyalty program, you need to set a budget. This budget should reflect the amount of money needed for other marketing campaigns your business is actively pursuing. However, as your business scales and the loyalty program proves successful, don’t hesitate to increase the budget.
Choose high-margin products: the products you push on the loyalty program should have a high-profit margin. Therefore, you can reduce the price and give them away for free without hurting the overall bottom line of your business. In fact, some high margin products can have massive discounts and still sell for a profit.
Final Thoughts
To summarize, taking your business to the next level with a loyalty program should be a massive marketing event. It should create a buzz around your brand that causes customers to take notice and try it out for themselves. This will significantly increase your chances of getting more market share during the process.
Follow the tips in this article to get started on the right foot with your business brand loyalty program. You can also look at other loyalty programs in your niche to see what you’re up against. Ideally, you’ll offer the best one so that customers have a legitimate reason to choose your business.
