The Business Case for Loyalty
It’s a mad new world out in the market place. The way of doing business has changed. Brands are constantly being devalued or are on sale as the consumer chases the latest onslaught of daily deals, discounts or special offers.
And, with online shopping, the world is now at the consumers’ fingertips. They not only have choices like never before, but with social media, they have a voice like never before.
The result is that it is becoming more and more difficult to stand out from the crowd and to own the consumer. The question of how to establish, keep and increase the lifetime value of a customer is more important than ever.
Loyalty programs give merchants the meaningful insights they need to engage with customers in a more rewarding way. It is a win-win situation: the customer feels recognised and appreciated and the merchant benefits from their on-going patronage and recommendation.
Loyalty programs are a smart way to drive sales
Increasing customer frequency and converting customers to long-term loyalists can impact on your company profit significantly. Nielsen figures show that consumer spending is 46% higher with companies that offer loyalty card programs.
And loyal reward program members, according to a study by ‘Colloquy’, are three times more likely to be word-of- mouth champions. (www.colloquy.com)
It costs 6–7 times more to acquire a new customer than retain an existing one. And an increase in the customer retention rate of 5% can boost profits by up to 95%.
There are many forms of loyalty programs and you need to know whether they are simply promoting frequency or driving true loyalty. That’s why finding the right one to assist you to capture, segment and communicate with your customers is important.
And we can help you to win back lost customers as well. Michael Lowenstein, the customer churn expert, states that the success rate in winning back lost customers can be 3–4 times as high as trying for new customers.
Loyalty programs touch almost all aspects of a business and as such should not be viewed as an expense but as an investment in your company’s future. They can profoundly improve the way your company is viewed by your customers.