One of the most common misconceptions we come across when talking about customer loyalty marketing programs is that they’re “giveaways.” A lot of brands tend to see loyalty programs in terms of losses, or -in various ways- express hesitation about “bribing” customers into remaining loyal.
The truth is that loyalty programs are anything but giveaways/bribes. The rewards they provide to customers are, in fact, mostly incidental – a very small price to pay for the very real benefits that they bring to brands. Benefits which would be hard to obtain in any other fashion.
When viewed simply as a marketing expense, loyalty programs provide significant ROI – often far greater than marketing expenses aimed at bringing in new customers!
Five Ways Customer Loyalty Marketing Benefits YOU
- Keep your customers’ numbers high for less.
Simply put, customer retention is almost inevitably cheaper than new customer acquisition. Usually, it’s much cheaper. While the numbers can vary significantly depending on the market/vertical, numerous studies typically place new customer acquisition as being anywhere from four to ten times as expensive as retention.
- The 20/80 Rule
There’s an old adage which has been found repeatedly to hold true: Your top 20% of customers are responsible for roughly 80% of your sales. These percentages will vary slightly, but what doesn’t change is that your most loyal customers are by far the most important to your bottom line.
- Loyalty programs create great customers.
A recent 2014 study found that 29% of buyers who considered themselves loyal to a brand, were loyal specifically because of a customer loyalty marketing program. Loyalty rewards truly can change apathetic or occasional customers into frequent buyers, and that means huge payoffs on the investment.
- The stuff brand ambassadors are made of.
Few forms of outreach are more valuable -and harder to obtain- than legitimately organic recommendations from buyers to friends/family/followers on outlets such as social media. Loyalty programs create the sort of buyers who will engage in such brand ambassadorship.
- Track your data.
Finally, one can’t overlook the data possibilities. Customer loyalty programs bring large amounts of actionable insights into the attitudes, behaviors, and preferences of those top buyers. In turn, you can market to them more effectively.