Today’s market is notoriously competitive. There are more than 32.5 million businesses in the US, and the reality is brands can no longer compete on product or price to survive as profit margins continue to decline.
In addition to this, consumers today have greater expectations from brands. This last year has caused many brands to focus on a marketing strategy that improves customer retention while exploring the impact of a strong customer loyalty program.
Leading brands are turning to customer loyalty programs to differentiate themselves and add more value to their customer relationships. They are successfully using omnichannel loyalty programs as an invaluable source of customer insight and first-party data collection.
Omnichannel loyalty and engagement programs play a key role in enhancing brand-consumer relationships because of the massive amounts of data and insight they offer into:
Shopping and browsing behavior
Channel or payment preferences
Brands look to omnichannel loyalty and engagement strategies to:
Increase market share
Entice customers away from the competition
Retain their most valuable customers
Look at seven reasons brands are increasingly investing in loyalty programs.
Continually acquiring customers to drive sales is far more expensive than retaining and marketing to the customers whose hearts you’ve already won. Add to this the fact that new customers are not nearly as profitable as your loyalists, who, on average, spend 67% more. This means that more than half of your sales are coming from a small percentage of your customers, so nurturing these relationships is important.
Loyalty programs not only improve customer retention but also provide your customers with incentives to make purchases and advocate for your brand. By leveraging the data you already have on your valued customers, your loyalty program can offer personalized brand experiences that make members feel valued and encourage higher spending and greater brand engagement.
71% of people surveyed are active in at least one to five loyalty programs per month, according to research by Oracle, which means if your competitors currently offer a loyalty program, you’re already at a disadvantage. In fact, 62% of consumers surveyed agree that loyalty programs make them more likely to shop with a brand.
A loyalty program allows brands to compete on customer experience instead of price alone. Retailers that continue to compete on price do not fulfill other critical business objectives, such as customer satisfaction and loyalty.
With diminishing profit margins in the retail sector, this practice is a surefire way to kill your business. Investing in loyalty and customer-centric strategies can help you truly differentiate your brand offerings, incentivize your valued customers to engage with your brand, and remain top of mind when they are considering a purchase.
Give your existing customers a reason to keep coming back and attract new customers by providing a loyalty program that rewards customers for every action taken with your brand.
Research by Accenture has demonstrated that 57% of consumers spend more on brands to which they are loyal.
Loyalty program rewards that go beyond offering discounts allow their members to feel part of an exclusive community in exchange for their brand loyalty. From elite rankings to special events, unique experiences, and member-only access, offering one-of-a-kind rewards and experiences can make members feel special, valued, and appreciated.
In addition, brands can allow their loyalty members to use their rewards towards donations to social causes that are authentic and meaningful to the brand. This reinstates the values of the brand with the consumers and establishes connections at a deeper level.
Customer lifetime value (CLV) predicts the net profit attributed to the entire future relationship with a customer.
A loyalty program can help you calculate exactly what the CLV is for each of your customers and optimize your customer acquisition and retention strategies accordingly.
Research by HBR shows companies with strong loyalty marketing programs grow revenues 2.5 times faster than their competitors and generate 2-5 times higher returns to shareholders.
A loyalty program can help you understand the behaviors and preferences across all channels of your most valuable customers and market to them more intelligently. This level of understanding also unlocks the ability to attract “look-alike audiences” and invest in campaigns that will drive high-value consumers to your program.
Brand advocates are the customers who recommend your brand to their friends and family. These customers are extremely valuable to your brand. In fact, Invesp found that 88% of consumers trusted word-of-mouth recommendations from people they know the most.
Loyalty programs with a “refer-a-friend” feature reward brand advocates for customer referrals. This not only helps with customer retention but also helps with customer acquisition. Incentivizing for product reviews is also a great way to encourage high-value members to engage with your brand, products, and prospects. Product reviews provide invaluably and trusted information to potential consumers.
Businesses are finding value in building out customer journeys that optimize customer experiences at every touchpoint, both digital and physical. Mapping out a customer journey before launching a loyalty program is essential for maximizing the opportunity to deepen engagement and capture customer data at every interaction. For example, some brands reward customers with points just for walking into a store or downloading a mobile app as part of their loyalty program offering.
Additionally, because loyalty programs enable brands to create a unique yet persistent identifier for their consumers, brands can recognize and communicate with their loyal consumers on different devices and in differing locations. This unique ability transcends the gap that brands face in a multichannel environment.
By adopting an omnichannel loyalty program, brands can take the customer experience to the next level and strengthen engagement and foster greater loyalty by rewarding customers for each brand interaction.
Research by Oracle finds that while the majority (70%) of consumers prefer to shop online, 41% also enjoy shopping in-store. Consumers still find value in touching and seeing products firsthand, but there are multiple reasons many are avoiding a trip to the mall, including long check-out lines, limited access to store inventory, and poor store layout.
Brands are investing in the in-store experience to alleviate some of these frustrations and also to create unique brand environments that drive customer loyalty. Loyalty programs and the data gleaned from these programs can help brands:
Create personalized in-store shopping experiences
Make contactless payments
Let customers order online and have pickup options for in-store offers
Offer better merchandising decisions
Do more experiential marketing activations
By leveraging a customer loyalty and engagement program, brands can fully access and leverage customer insight to drive critical business decisions, gain a competitive edge, and ultimately win and retain loyal customers.