Companies must understand that it is much more effective to keep existing customers buying from them than to go after new users. What are loyalty programs and how can they help your business?
In the world of marketing, loyalty programs are strategies used by companies to both maintain and increase their customer base. To achieve this, promotions, discounts, points for purchases or rewards are offered that seek to attract more customers, both new and existing ones.
According to figures from B2B International, more than 50% of B2B marketers acknowledged that Getting more loyal customers is a challenge, but doing it comes with 10% increased sales.
On the other hand, personalizing loyalty programs is key to increasing customer engagement with the brand. According to figures from McKinsey, customization It allows increasing income between 10 and 30%, reducing acquisition costs by 5% and improving the efficiency of investments in Marketing by 20%.
In recent years, people have become more demanding of brands. This requirement is not only due to the quality of the products or their prices, but also to obtain some type of extra revenue or reward.
For this reason, the loyalty strategies carried out by organizations are intrinsically related to this aspect: reward, give some additional prize to those recurring customers.
Although there are many ways to create loyalty or loyalty programs, they all work in the same way:
- Create techniques for customers to make recurring purchases,
- Achieve that customers are loyal to a brand over time,
- Foment that users recommend said company to their friends and family.
Objectives of Loyalty Marketing
One of the main goals is to retain the number of customers, since loyalty programs increase retention rates. That way, users are happier, while companies can sell more.
Along the same lines as the previous item, recurring purchases allow organizations to learn more about their customers. In this way, organizations can even go a step further, creating loyalty strategies with a greater degree of personalization and precision.
But ultimately it is about increasing revenue. And it is that in general, companies obtain the highest percentages of their sales thanks to already loyal customers.
Four benefits of having a loyalty program
1. Greater competitiveness
One of the main benefits of "loyalty marketing" has to do, simply, with selling more than the competition. Thanks to the loyalty strategy, customers have incentives to buy from those brands or companies that offer them better promotions and benefits.
2. Lower cost of customer loyalty
As is well known, getting new customers is considerably more expensive than selling more to existing ones. This technique, known as upselling, it is not an extra expense for companies, which can offer special benefits, such as bonuses or discounts to create recurring shopping habits.
3. Happy customers = more customers
A user who has been rewarded for their purchases will surely recommend the company to their friends and family. That can attract these new groups of people to buy products, which translates to more customers and more revenue for the company.
4. Create better campaigns
Thanks to databases and better use of existing customer information, companies can create targeted campaigns to offer benefits at the right time, through the right channel.
Types of loyalty programs
1. Points program
With each purchase, customers earn points that can then be redeemed for more products or services. Classic and effective.
2. Multi-brand program
This is where partnerships between different companies come into play. For example, an airline that associates with a credit card and rewards customers with travel miles for their purchases.
3. Tier Rewards
This loyalty program provides different rewards depending on the spending levels of customers. If the reward is attractive enough, the user will choose to spend more.
zentricx, a company that has local offices in Spain, seeks to collaborate with organizations to enhance their digital transformation journey. Thus, thanks to its state-of-the-art technological solutions, retail companies can boost their businesses. If you want to know how these tools will make your business grow, we invite you to Contact Julio Cesar Blanco, Innovation Director & Head of Spain Office at Zentricx.
