How to Build Customer Retention with Loyalty Programs
As per a report by Thinkjar, it is 6 to 7 times costlier to win a customer than keep an existing one. In another study by Marketing Metrics, businesses are 14 times more likely to sell to an existing customer than a new one.
Given these statistics, it is important for business to think about what strategies they are using to guarantee their existing customers keep returning back. Today, up to 65% of marketers are having loyalty program. In case if your business falls in the other 35%, you may be losing some loyal customers. Here are a few things you can do about it.
What is a loyalty program?
This is a rewards program given by a company to customers who buy products or use their services frequently. A loyalty program may offer customers with coupons, free tickets, stock or even an advance on pre released products.
There are some more effective ideas for loyalty programs:
1. The simple point system
This is the most popular method. Here, customers who patronise a business regularly earn points which aggregate into some type of reward. For instance, Le Accor Hotels offers customer points each time they use their hotel. Once the customers have up to 2000 reward points, they can get £40 off on their next booking. This is only for frequent visitors.
However, a few businesses make this relationship between points and redeemable rewards complex. To make it successful, keep it easy and simple to understand.
2. The loyalty card
Many retailers use loyalty cards as a way for achieving a 2-in-1 deal. The loyalty cards collect all customer details such as, purchase habits, identity, etc, which they can use in marketing programs for a personalised service. However, the fundamental use of a loyalty card is to offer discounts to frequent purchasers.
Retailers can use loyalty cards to build a solid customer base. "At the point when customers use these cards on your epos system, you record their purchase habits and can serve them better".
3. Charge an upfront fee for VIP customers
Loyalty programs are designed to cut down barriers that exist between your business and its customers, so it appears to be odd that we are suggesting you charge them with a fee? Well it has been observed that in certain situations customers would prefer to pay a one-time fee to bypass certain barriers and access a service. This is useful for both the customer and your business.
4. Design non-monetary rewards around your customer preferences
This is one important advantage of the loyalty card. With it, you can understand the values of your loyal customers and reward them accordingly. It doesn`t generally need to be cash based. If you see a customer buys iTunes cards routinely, at that point they likely are music lovers.
Instead of discount for your own products, you can give them two free passes to an indie concert. Nothing will make them more love you more.
It is important to differentiate the advantages for existing customers from new ones generally the loyal customers will feel `insulted`. If you are setting up a program to draw new customers, guarantee it is unique and comparatively of "less value" to programs designed for long-term customers. Along these lines, you keep everyone happy.