5 reasons why you should have a customer loyalty program

Do you want more returning customers? The kind of customers who spend more and visit more often?

A loyalty program’s main purpose from your point of view is to make more money by keeping your current customers. They can achieve this because they’re cost-effective, and they help to increase social proof, word-of-mouth and customer referrals.

What is 5 reasons you should have a customer loyalty program

  1. Strengthen a positive customer experience
  2. Show customers that it’s worth it to come back to your store
  3. Encourage customer referrals
  4. Build social proof
  5. Maximise brand advocacy


1. Strengthen a positive customer experience

According to Forbes, 79% of online shoppers will turn to a competitor if they experience poor customer service in the first week. That’s a fast way to lose a customer, right?

We'll take a little detour into social psychology.

Customers are excited when they see they can collect points in exchange for purchases, thinking, “Wow, I get something extra for my money besides the product I bought! ”

2. Show customers that it’s worth it to come back to your store

Do you remember why your best friend collected Starbucks stars? Each time they purchased 12 items, they received a free drink or snack. It may come as a surprise to you, but Starbucks actually changed its reward mechanism in early 2016.

Here, the point is that customers stay loyal because they want to save money. A traditional loyalty program (spend a dollar and earn a point) appeals to many customers. But it’s not enough! Seventy-six percent of shoppers today expect some recognition in addition to monetary benefits, such as a perk that makes their shopping experience smoother, faster, and more personalised.

3. Encourage customer referrals

Think about it. Your friend asks you which mobile phone you would suggest while you're enjoying a casual dinner party. You recently bought the newest iPhone, and because you adore it, you tell your buddy about all of its best features in an effort to persuade her to do the same. They reflect at home, and sure enough, the following week they place an order for the exact identical iPhone.

Customers will be happy to spread the word about you if your loyalty programme rewards them for referring their friends. A dual-sided reward mechanism, in which both the referrer and his referral benefit from the process, is the most common tactic used here.

Customer referrals can outperform even the best-optimise Ad words ads because customers only refer friends who are likely to be interested in your products. According to a study, friend referrals generate more than twice the sales as paid advertising. Finally, according to a Deloitte research study, referred customers have a 37% higher overall retention rate.

4. Build Social Proof

According to Forbes, 81% of shoppers research products, compare prices, and read reviews before making a purchase. (I'm sure you do the same before purchasing your next laptop, coffee maker, running shoes, or anything else!)

A loyalty programme not only improves customer satisfaction in your store, but it also allows you to remind and reward customers for leaving product reviews or using specific Instagram hashtags when posting photos of your products, to name a few examples.

This is the land of user-generated content, which boosts trust in your eCommerce store and even helps customers make faster purchasing decisions. According to Ambassador, 88% of customers trust online reviews, so it's worthwhile to put effort into this field.

5. Maximise Brand Advocacy

Before you accuse me of favouring loyalty programmes, consider the following statistic: In the first two years, 77% of transaction-based programmes fail.

How can I avoid this mistake?

Loyalty programs are designed for loyal customers. These are the top 20% of all customers he could increase sales by 70% by spending more over a longer period of time. But they're not just with you for the discount - they're with you because they love you!

Loyalty programs also provide a great opportunity to deepen engagement. The higher the engagement, the more likely they are to promote your brand. They are two to three times more effective at persuading others to buy from you than those who are not endorsing.


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