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6 reasons you should implement customer loyalty programs

Reading Time: 4 minutes

The purpose of loyalty programs is to offer customers access to exclusive prices and loyalty discounts. This can help not only with purchasing behavior, but also with customer retention.

There are different types of rewards and recognition programs that businesses can offer their consumers, but the challenge lies in how well the loyalty program objectives are met—such as helping the business grow or raising brand awareness.

The best loyalty programs have the power to transform a business into a customer-centric profit machine. Customer loyalty programs should be part of your marketing strategy because of the innate level of customer service they provide, and the insight into customer purchasing patterns.

Here are 6 reasons you should focus on fully establishing your loyalty programs.

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1. Boost growth/sales

A good program encourages customers to purchase more of your products or services, but also increases the chances of them remaining loyal to your brand.

Loyal customers buy more and are often willing to pay more, which can help you increase conversions, boost your sales, and grow your business. McKinsey research has found that free loyalty programs can increase the likelihood of members increasing their spend with the brand by 30%, or 60% for paid programs.

Sephora’s Beauty Insider Program offers discounts while also incentivizing customers to spend more:

2. Maintain, gain, and win back customers

The primary objective of a loyalty program is to retain existing customers, and the programs are effective for both the customer and the business.

Customers like to feel valued and important. When you set your loyalty program goals, it’s important to ensure that this happens, with customers accessing deals and perks, boosting retention.

It’s also important to remember that the loyalty program purpose isn’t solely to retain customers—it can also help to attract new ones.

And thanks to the data you’ll collect with a loyalty management system, such as the customer’s preferred communication channel and their purchase history, you’re able to reach churned customers more easily. You can use the data to send relevant, highly personalized messages that encourage them to visit your store again.

3. More traffic to your site

As the purpose of customer loyalty programs is to ultimately ensure customers feel like they’re getting a good deal, they’re more likely to visit your website regularly. They may also refer you to their family and friends, especially if you incentivize this with a referral scheme.

This all results in more traffic to your store, without an increase in marketing spend.

4. Build relationships

By connecting with customers on an emotional level and building genuine relationships with them, you’ll also increase loyalty and boost profits.

Research has found that 79% of customers develop loyalty to a brand that offers exclusive, superior benefits.

Knowing your customers’ specific needs will allow you to develop creative and positive programs that will give them the most value.

5. Create brand advocates

Brand advocates play a big role in every business, as they have the ability to influence other people and encourage them to try and use your product or services. As they bring in more customers, you can avoid spending on marketing and promotional activities.

Brand advocates are important because people love to share their experiences. Almost a quarter of us tell friends and family about our favorite products each day, while 78% of people share recent experiences to people they know at least once a week.

These recommendations are powerful—90% of people are more likely to trust a brand that’s been recommended to them.

Consider LEGO VIP, which offers not only points and discounts, but also early access to exclusive sets, members-only gifts, as well as monthly promotions “for VIPs”:

6. Improve overall business practices

By asking your customers for their opinions on product satisfaction, customer service, and their overall experience, you can strengthen your relationship with them while simultaneously discovering areas that need to be improved.

By understanding their needs, you identify the gaps that need to be filled to improve business practices. As those gaps are filled, you should see higher levels of customer satisfaction, which in turn builds brand advocates and referrals.

Wrap up

Loyalty programs provide an effective vehicle through which a business can provide an amazing brand experience, encouraging the consumer to become more attached to the company.

Omnisend’s App Market has more than a dozen apps for loyalty and rewards, including gamification, loyalty and reward points, and referrals.

In addition to loyalty programs, marketing automation software creates a seamless experience for your customers. Every new subscriber will receive the same welcome message, shoppers can receive personalized recommendations, and you can communicate with them on their preferred channels. All of which helps to leave a strong, lasting impression and build brand loyalty.

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Richard White
Article by
Richard White

Richard is a Content Marketing Manager at Omnisend. An avid writer, he's said to have been born holding a pencil. Fascinated by all things handmade, if he's not reading or writing he can often be found practicing leathercraft.

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related features
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