23 Jul 2020

7 Reasons Why Loyalty Programs Are Essential for Brands

By: Melissa Canellis


Customer Loyalty Solutions Drive Profitable Relationships

Companies in every industry are utilizing customer loyalty solutions more often than ever before. Brands understand the importance of retaining existing customers and are choosing to implement a system directed specifically at building customer loyalty. Some marketers may think of loyalty programs and initially imagine a large portion of existing resources being funneled away into a program that doesn’t deliver ROI.

However, in reality, pursuing new customers is the true cost burden; a February 2018 article in Forbes asserts that keeping an existing customer is 5 times less expensive than acquiring a new one and increasing customer retention by 5% can increase profits from 25%-95%.

Because marketers recognize that no two customers are exactly the same, it’s clear that loyalty needs to be delivered strategically. One-off mass promotions that miss the mark for 80 percent of a brand’s customers are no longer efficient or cost-effective in an environment where consumers are exposed to between 4,000 and 10,000 brand messages every day.

Organizations need the ability to identify every individual that interacts with their brand, appeal to his or her specific needs and preferences and build a level of trust that creates a 1:1 connection.

Customizable loyalty programs provide brands the ability to incentivize customers to return or participate in other ways such as to advocate about the brand to friends or to support their favorite causes, which also enhances the overall value of their company.

Customer interactions continue to expand beyond just visits and into many online spaces, meaning loyalty now happens across a range of touch points. Driving customer engagement today can take many transactional and non-transactional forms including, sentiment surveys, gamification, social feedback, referrals, etc., which are valuable components to modern loyalty programs.

The spring of 2020 also highlighted the importance for organizations to identify their customers and have the means to communicate with them digitally.  The pandemic has created new circumstances and changes to daily operations for many businesses. Brands need the ability to message customers on a digital channel and in an appropriate tone about new procedures, updated business hours, temporary closures, and relevant or redesigned offers, as face-to-faces visits have not been an option.

The best customer loyalty programs have responded to these new market conditions and look to develop customer relationships through omnichannel communications and relevant incentives designed to create and optimize a variety of interactions.  

The value of building a loyal following provides brands with multiple benefits that can extend their reach and differentiate them in the marketplace. 

Here are 7 key reasons why your brand needs a customer loyalty program:

1. Makes Customers Happy

The simple fact is that every company wants people to purchase their products or services. A loyalty program helps you reach customers through 1:1 connections based on real-time data to deliver relevant offers over the channels they prefer and at the times they need them.

Some loyalty programs also offer gamification strategies that provide innovative and fun ways to deliver engagement. Customers are incentivized and rewarded for taking specific and/or multiple actions and developing new habits through contests, challenges, badges, and sweepstakes.

2. Drives Growth

A loyalty solution provides marketers with program tools such as WiFi marketing and email signups that drive acquisitions, while providing every kind of customer a tailored program designed with relevant ways to earn and redeem points. Ongoing loyalty campaigns and offers also deliver valuable same store sales to help franchisee and brand profitability.

3. Recognizes In-store & Online Behaviors

Loyalty programs provide brands the ability to recognize unique individuals through the layering of the data that starts with initial email and WiFi signups. Then a brand can begin to learn about their customers’ behaviors and preferences as they move across different devices, channels and platforms. Having an understanding of a customer’s history with your brand, unlocks key insights that help you maximize value and return on marketing spend through the delivery of a consistent, seamless personalized experience.

4. Provides Valuable Feedback

Loyalty is a two-way street. Brands that leverage social listening tools can engage with customers when there is an issue and provide a resolution, help answer a question or provide thanks for a positive review. Additionally, customers can be encouraged to login and provide experience ratings, and submit feedback the organization can proactively address. Customer sentiment tracking is a powerful tool to help marketers see the total value they’re delivering to customers both in-store and online.

5. Boosts Referrals

Marketers can create campaigns that engage customers and make it easy for them to earn points or a special offer by referring friends to join the loyalty program via their social media networks using their mobile app or their website. This is an inexpensive way for brands to acquire new customers and retain existing ones. 

6. Enhances Your Reputation

The more customers feel appreciated the more likely they are to think and speak positively about a company. Customer loyalty programs help create additional marketing efficiencies by incentivizing and leveraging customer appreciation by offering the ability to earn points by sharing ratings and reviews on social platforms and a company’s website.

7. Increases Your Digital Presence

Modern loyalty programs are designed for mobile customer engagement. Most reward programs today are delivered via a mobile loyalty app for ease and convenience. Brands are engaging customers with campaigns and offers through email, SMS and Push.  And during the pandemic, digital communication is the only method many brands have for providing updates, operational changes and offers to keep customers engaged with them during months of shelter-in-place mandates. Many companies have added contactless options such online ordering, curbside pick up and delivery that are now becoming part of the standard digital business model.  

Learn More

To meet changing customers’ expectations for convenience, value and personalization requires marketing teams to lean on a comprehensive loyalty program.Learn how loyalty can enhance your efforts and drive valuable outcomes for your business. Download our ebook Loyalty Redefined: Delivering Engagement for the Modern Customer.