Top Five Ways Loyalty Programs Make You Money
‘I already have customers. Why should I bother with a loyalty program?’ you may be thinking.
Beyond offering your customers an incentive to return to your locations to make repeat purchases, there are a lot of reasons why you should implement a loyalty program and make sure your POS is integrated to process loyalty programs.
The current state of the marketplace warrants the need for obtaining and retaining customer loyalty; in today’s environment customers are more demanding, competition is more intense and it is increasingly difficult to differentiate businesses from one another.
In this context businesses should aim to; focus on their best customers, optimize the profit made from them and increase the period in which they remain customers.
Loyalty programs obviously help you with this. But they also help you with profitability and aid your bottom line.
Here are the top five ways in which loyalty programs make your business money;
Loyalty programs get you important data, not just repeat visits
The best loyalty programs go beyond getting repeat visits to also getting you information from your customers. This information should tell you more about these customers. Information such as who the most and least profitable customers are, what they wanted and what adjustments or offerings would entice them to become loyal customers. To ensure that you get this information seamlessly be sure your loyalty program is integrated with your POS so that the data from each transaction is automatically captured.
Loyalty programs help you win back profitable customers that have defected
The success rate in targeting ‘lost’ customers can be three to four times higher than looking for new customers. This is in part because of the valuable information on them your loyalty program provided such as information about their past purchase history and their preferred communications channels. Using this information can help you successfully win back their business.
Loyalty programs help you target customers more precisely for acquisition
A good loyalty program will help you attract new customers. A great loyalty program will allow you to use the existing data from your loyalty program to establish demographic profiles of ‘best customers’ and then target individuals with similar demographic profiles in acquisition efforts. In this way a loyalty program can provide you with an accurate picture of who your customer is and help you get to the heart of what type of customer you are acquiring. It is also important to note that without a loyalty program, you might not even know that you’ve lost some of your best customers already. Loyalty reporting can be the first indication that a customer’s visit frequency or spending has gone down.
Loyalty programs can help you move customers up in spend bands
Loyalty programs which offer different tiers of rewards by offering, for example, extra points for going over a certain spend point are proven to move customers from one spend level to the next.
Loyalty programs help you build real customer relationships
Building relationships with customers is very important and at the same time very difficult. Building a successful relationship with a customer can lead to behavioral loyalty and thus to increased bottom-line profits. Such a relationship can be created through fostering trust and by the careful collection and analysis of loyalty program data. Through knowing the customers’ preferences and wants merchants can provide products and services that appeal to these customers. Beyond this excelling at customer service, problem correction, delivering personal programs such as birthday discounts will also go a long way to create a relationship between you the merchant and the customer.
As we’ve seen loyalty programs provide many ways in which to make you money. But beyond this they also give you a way to give your customers better products and services and in the long term create a high-quality and more meaningful relationship between you and your customer. A quality loyalty program provider such as Givex can guide you through the loyalty program implementation process.
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