The ROI of investing in customer loyalty

January 31, 2022 | 3 minute read
Jennifer Ajer
Sr. Product Marketing Manager, CX Marketing B2C
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investing in customer loyaltyAs most marketers know, a customer loyalty strategy focuses on creating an emotional connection between a company and a customer. This emotional connection leads to deeper brand engagement where the customer is more likely to buy again in the future. An output of customer loyalty is often a higher customer retention rate, a measure of customer engagement and resulting sales.

Customers today have more choices than ever before, so many companies focus on customer loyalty programs and initiatives to help them stay competitive. But the question remains: What is the value of investing in loyalty?

Here are four ways to quantify that value.

Customer loyalty costs less than customer acquisition

A loyal customer who makes a repeat purchase has the same impact on revenue as a new customer’s first purchase. The critical difference is that it’s faster, easier, and cheaper to earn revenue from a loyal customer.

To earn revenue from a first-time customer, you must make them aware of your brand, show them a relevant offer, and demonstrate enough value that they’re ready to choose you over a competitor. By contrast, a loyal customer can skip those steps because they’ve already chosen you.

Loyal customers spend more

By definition, loyal customers tend to purchase more frequently and buy more over their lifetimes. But loyalty program membership and its associated perks can cement that value even further.

Members of paid customer loyalty programs (e.g., programs like Sam’s Club Members, Amazon Prime members, etc.) eager to recoup their costs, so they are 60% more likely to spend more money with those brands than they otherwise would.

Customer loyalty programs are a great source of data

Customer data helps brands engage customers, create personalized offers, develop new products and services—the list goes on. But that data is becoming harder and harder to collect. Due to the deprecation of cookies, collecting first-party customer data is becoming an absolute necessity. This is where a loyalty program can help. Information such as address, gender, phone number and age can be collected and rewarded through a loyalty program.

And you can track favorite products and purchase frequency over time. Details like these can inform and personalize other touchpoints throughout the customer experience.

Build a pathway to greater advocacy

Customer advocates represent the highest form of loyalty beyond repeat purchases and ongoing engagement with your brand because they share their positive customer experiences with peers. This helps to build trust, which can translate into new customers. And, considering that 68% of customers say trust in the brands they buy from is more important today than in the past, that’s more valuable than ever.

What's more, brands find it hard to build trust with new customers on their own. Nearly a quarter of customers say they will never believe a message is true if they only see it in brand advertising. But reading a customer review or hearing firsthand from a peer corroborates brand claims, building the trust needed to purchase.

 

An investment in loyalty is an investment in your business, your customers, and your bottom line. Learn why Forrester named Oracle CrowdTwist a Leader in Loyalty Solutions.

oracle crowdtwist

Jennifer Ajer

Sr. Product Marketing Manager, CX Marketing B2C

Jennifer Ajer is a seasoned cross-channel marketer who has ten years’ experience in various marketing roles. She is currently a Senior Product Marketing Manager for Oracle Marketing Cloud's B2C products.


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