Loyal customers are some of the most important assets a business can have. The numbers prove it. Forbes reports that “existing customers are 50% more likely to try new products and they spend 31% more on average than new clients” and “increase in customer retention rates by 5% enhances profits by 25% to 95%.”
True loyalty is gained gradually over time due to experiences with excellent products, services, content, and aftercare. But there is one trick to speed it up - a loyalty program. This article will cover the basics (definition, elements to include, tips, etc.) and provide examples of the best customer loyalty programs for some inspiration.
What Is a Customer Loyalty Program?
A loyalty program is a mobile marketing strategy aimed at increasing customer retention. It is designed to increase repeat deals by recognizing and rewarding customers who purchase or engage with the brand. Typically, if a customer makes purchases on a recurring basis, it graduates them to higher levels of loyalty and lends better perks. However, the point systems differ and can reward all kinds of interactions.
Better customer engagement
Higher customer lifetime value
Lower attrition rate
Improved brand affinity
More brand advocates
Access to first-party data
If you’re skeptical about the impact of loyalty programs, two large-scale academic studies published in top marketing journals can address these concerns.
The first study for the Journal of the Academy of Marketing Science looked at 1,816 companies in the retail, entertainment, hospitality, telecommunication and information, and food and beverages sectors.