Understanding the true value of customer loyalty programs
According to Colloquy, there are 3.3 billion loyalty program memberships in the United States alone. When you consider that the entire U.S. population is only 319 million, the amount of loyalty programs per person is staggering. The average member is enrolled in over 13 programs and 71% of those earning $100K+ use loyalty programs.
76% of shoppers think that loyalty programs are a part of their relationship with brands. But most businesses focus their programs on discounts. You can’t substitute discounts for brand loyalty. There is an emotional aspect to shopper behavior that brands can’t ignore.
97% of loyalty programs are transaction-based, where customers receive discounts for purchases. While this is a foundational aspect of a rewards program, most businesses don’t go beyond that. Only 25% of them reward customers for some type of engagement. If you make your customer experience entirely about spending money, your rewards program won’t work. 77% of transaction-based programs fail in the first two years. The infographic from Selfstartr summarizes the current state of loyalty programs.
What happens, the communications you send, after the first sale matters A LOT. If you bombard customers with emails asking them to spend more to earn a few points, you’re doing it wrong. Instead, you should reward customers for leaving reviews or social sharing. Loyalty program software like Sweet Tooth Rewards or Antavo can help you do just that. If you're struggling to understand what your customers are looking for in a rewards program you can survey them. Focus on brand engagement and the ROI will come.
When loyalty programs get traction with customers, they generate profitability for your business. It is more profitable to retain an existing customer than acquire a new one. Businesses are 10X more likely to convert an existing customer than a new lead. And existing customers spend 67% more, too.
For a free crash course on loyalty programs visit Selfstartr’s Beginners Guide to Customer Loyalty Programs.To learn more about customer experience management check out Smart Insights' Hub Page