According to B2B International, “54% of B2B marketers said making customers more loyal was a leading business challenge, a 10% increase from the previous year”
Customers are expecting more from brands than ever before. That’s why loyalty programs are put in place by thousands of brands: Not only do customers want brands to convince them why they should use their products/services, but they want rewards for giving them their business.
This article will define what loyalty marketing is, what loyalty marketing can do for your business, and show you examples of loyalty marketing programs in action.
Loyalty Marketing Defined
Loyalty marketing is an approach to marketing, based on strategic management, in which a company focuses on growing and retaining existing customers through incentives.Marketing efforts designed to entice customers to make purchases again and again from a specific company. (Wiki)
Loyalty Marketing Strategies: Loyalty marketing strategies involve rewarding recurring customers for continually using a specific company’s product or service.
Loyalty Programs: A structured approach to rewarding customer actions that includes giving customers incentives for specific actions that benefit the company like discounts, rewards, free merchandise, or exclusive access.
According to Excentus, “Rewards that help consumers save on the cost of gasoline ranked #1 in 2016 as the most popular loyalty program currency, with 37% of consumers preferring fuel discounts over credit card rewards, coupons, retailer points and instant discounts at the cash register.”
Customer Loyalty Program Goals:
- Retaining more customers: Loyalty programs help increase retention rates which are directly related to the happiness of your customers and the revenue of your business.
- Acquiring Customer Data: Acquiring new customer data is another goal of loyalty programs. Customer Data can be used to design even more targeted and personalized loyalty programs.
- Increase The ‘Share of the Wallet”: The “Share of the Wallet” is the percentage of disposable income spent on a business’ products or services. Loyalty programs give customers incentives to spend their disposable income on your products or services.
8 Strategic Benefits of Loyalty Marketing and Loyalty Programs
- Loyalty Programs Create A Competitive Advantage: A company using a loyalty program has a competitive advantage over their competitor. The customer has an incentive to buy from the company offering some sort of special promotion.
According to Excentus, “26% of consumers say they shop more frequently at stores where they can earn rewards, 17% plan ahead to take advantage of rewards and promotions, and 14% shop only where they can earn rewards.”
- Loyalty Programs Save Money: Although loyalty programs often involve offering discounts and promotions, loyalty programs help to retain existing customers, which has been proven to cost less than acquiring new ones.
According to The Balance, “The Cost Per Acquisition (CPA) for a new customer is often much higher than the costs of the discounts and freebies awarded to them through a customer loyalty program system.”