Loyalty matters. It’s the foundation on which businesses can grow and thrive. The big question is how to create, capture and keep that loyalty.
The answer could lie in part in a well-crafted customer loyalty program. They are a valuable option to help you offset the challenges many businesses are facing with changing customer behaviours. Consumers are switching brands at an unprecedented rate, and show no sign of stopping according to McKinsey, particularly with macroeconomic pressures adding to the incentive to shop around for better deals. Add in an increasing move to more purpose-driven purchasing and it’s a perfect storm.
As the adage goes, it’s easier to retain a customer than to get a new one. Now, more so than ever, customer loyalty is the Holy Grail. Your loyal customers can be worth their weight in gold, literally.
Consider the benefits they can bring:
- Improved customer lifetime value. Management consultancy Bain & Company says the average repeat customer spends up to 67 percent more in months 31-36 of their shopping relationship than they do in months 0-6.
- Building advocacy and word-of-mouth referrals. Loyal customers are more likely to recommend you to family, friends and acquaintances, including online. And research has consistently shown that we’re more likely to trust recommendations made by people we know.
- Access to customer insights and data. The feedback and data you receive from customers can be invaluable in informing new or improved products and services as well as refining your loyalty program and enabling greater personalisation.
- Loyalty can give you an edge over your competitors. Loyalty goes a long way in influencing your customers’ purchasing behaviour and it can provide a buffer against competitors offering similar products and services at a slightly cheaper rate.
Beyond the short term
While quick short-term incentives such as promotions have their place, to truly benefit and gain long-term loyalty, your customer loyalty or customer rewards program, too, should have a long-term focus.
McKinsey research shows that top performing loyalty programs can boost revenue from those customers who redeem points by 15-25 percent each year. That increase comes from more frequent purchasing, larger basket size, or a mix of both.
In Australia, McKinsey research shows consumers are 10 percent more likely to shop with an organisation with a top loyalty program, 14 percent more likely to increase frequency of purchases and 12 percent more likely to recommend the brand to others.
The Australian Loyalty Association Annual Loyalty Insights Report backs that up, noting that 65 percent of loyalty program members consider their loyalty program brands in their purchase journey.
But while Australian consumers were signed up to 98 million loyalty schemes in 2021 – an average of 4.4 per person – The Point of Loyalty’s For Love or Money 2022 report shows just 46 percent of loyalty members are active in the programs they’re enrolled in.
There are many types customer loyalty incentives you can deploy to help increase long-term customer loyalty and ensure your program is a success:
- Transactional loyalty, which is often deemed the easiest, involves simple offers and discounts. It comes at a price for your business, but can bring great results, bringing repeat custom.
- Social loyalty engages your customers on social media, rewarding them for online actions, be it sharing a review or one of your posts, retweets, likes or following your business on a particular platform, tagging friends on your posts, or other actions designed to drive your brand.
- Engagement loyalty has crossover with social loyalty, offering rewards for subscribing to newsletters, watching your brand’s content on channels such as YouTube, downloading apps and participating in giveaways or forums. It can also encompass social media sharing.
- Advocacy loyalty again shares traits with social and engagement loyalty in rewarding customers for referrals and positive reviews.
- Behavioural loyalty rewards customers for the behaviour you’re trying to drive, such as returning empty packaging to a store, using their own reusable shopping bag, or even buy two, get one free deals.
- Emotional loyalty is a more challenging area, entailing a much deeper level of commitment to a brand that extends beyond just economic incentives. Getting an emotional connection with customers requires providing a meaningful experience focused on the customer’s needs, engaging them emotionally and creating a sense of belonging.
Long term loyalty is a critical factor for the sustainability of a brand. Crack the customer loyalty code with a rewards program that resonates with your customers and you’ll reap the benefits.
Gratifii’s sophisticated, yet easy to use, loyalty and rewards platform combined with guidance from our local expert team can help power your loyalty success. If you’d like to learn more about how we can help you, request a demo now.