Loyalty programs are a great marketing tool to help create repeat customers who are more loyal to your brand in the long term.
In industries such as retail and travel, retention is often a matter of giving customers what they want. In fact, 75% of consumers prefer companies that offer some kind of reward. If you want to impress and retain more customers this holiday season, it may be time to create a customer loyalty program.
However, some entrepreneurs are on the fence about whether loyalty programs are right for their customers and their store. Wondering what a customer loyalty program can do for your own retail or travel business? Keep reading to find out!
How Do Customer Loyalty Programs Work?
A customer loyalty program rewards consumers for certain behavior related to your business. This may include offering rewards for frequent purchases or even rewards for discussing your brand on social media.
At the heart of it, these loyalty programs are all about giving your business an advantage over the competition. If you and your rivals offer similar products at similar price points, customers are likelier to go with the business offering them better rewards. In the retail customer’s mind, every penny saved is a penny earned.
Creating such a program is a real win/win for your company. That’s because it can help attract new customers even as it helps you retain existing customers.
Why Customers Enjoy Rewards Programs
Loyalty programs are a great part of any retail marketing strategy because they leverage consumer psychology. When done right, these programs make customers feel special because they get a reward for something they were already doing.
And depending on the nature of your rewards program, a customer may come back when they otherwise wouldn’t. For example, someone on the verge of getting a free sandwich is likelier to come back to the restaurant.
In this way, a loyalty program helps to build anticipation. This may be enough to keep more of your customers coming back.
Keeping New and Old Customers Happy
When it comes to special offers, many businesses make the rookie mistake of offering the best deals to new customers. For example, a travel company offering a hefty 10% discount to new clients.
On paper, this helps to drive sales and boost your overall revenue. However, maintaining that revenue is all about maintaining a certain number of customers.
If you exclusively focus on rewarding only new customers, it may cause resentment among existing customers. And this resentment may drive them away.
There is nothing wrong with offering both new customer rewards and loyalty discounts. But you may find that loyalty rewards are also a great way to attract new customers. This is all thanks to word-of-mouth marketing.
A Better Word-of-Mouth Marketing Strategy
One irony of running a business is that your best marketing tool is one not fully in your control: word-of-mouth!
These days, many prospective customers want some kind of social proof regarding the quality of a product or business. It’s one of the reasons we always check reviews before making online purchases. And customers place even more weight on the recommendations of friends and family when it comes to local businesses.
It turns out that a loyalty program is a great way to drive word-of-mouth recommendations, especially around the holidays. As we noted before, customers enjoy getting rewarded for something they were already planning to do (just think of it as your holiday gift to loyal customers).
Happy customers who feel like they just got additional value at no additional cost will recommend you to others. This turns your most loyal customers into brand ambassadors for your business, and they can help you bring in more customers this holiday season..
A Program That Pays For Itself
Despite these benefits, some retail and travel businesses hesitate to create a customer loyalty program due to the cost. In short, they see these rewards as lost profit that could otherwise help their business out.
Here’s the thing, though: a good loyalty program more than pays for itself. For one thing, you control what the rewards are, so you can make sure you don’t give away anything too exorbitant.
And, as we noted above, loyalty programs help with word-of-mouth marketing. This means you don’t have to invest as much into your traditional marketing budget to start seeing more customers.
Pretty soon, you won’t see loyalty programs as too expensive for your business. You’ll instead see these programs as some of the most cost-effective marketing tools that money can buy!
Using Social Media to Fuel Customer Engagement
Speaking of cost-effective marketing, it’s important for any competitive retail business to market via social media. As an added bonus, creating a customer loyalty program takes your social media engagement to the next level.
For one thing, happy customers may spread the word about your loyalty program to friends and family online. This alone enhances the word-of-mouth marketing effect.
You can also encourage customer engagement by offering rewards specific to social media. For instance, you might offer a reward to someone who shows proof they used one of your hashtags. You can even offer rewards for customer likes and comments!
Online, your brand ambassadors help to expand your business. And by rewarding them for their efforts, you ensure their retention as loyal retail customers.
A More Personalized Touch For Your Business
Are you really giving customers what they want? Keep in mind that 80% of customers prefer businesses that offer a personalized experience.
It doesn’t get much more personalized than a good loyalty program. When you give customers multiple ways to earn points and rewards, they enjoy having such choices available to them.
Plus, you can customize rewards for certain buyer behavior. When you reward customers, it helps to cement the idea that you created a custom award suited to their own needs and preferences.
The more analytics data you gather, the more you can customize the rewards. And such data also helps you transform everything from what you sell to how you sell it!
Get Started Today
Now you know more about how loyalty programs work and what they can do for your business. But do you know who can help you set one up ahead of this holiday season?
Here at Kobie Marketing, we specialize in helping your business succeed. To discover how we can give you the edge you need over the competition, contact us today!