January 22, 2021
Most of the successful brands today use loyalty programs as an effective method for fostering loyalty and growing their market.
Businesses must stay appealing and relevant to be liked and needed by their market. But more than those, businesses need loyal customers to keep coming for their products and services.
The leaders of economy are consistently discovering ways to keep their customers loyal to their brands. Others do this by introducing new services and some by enticing customers with additional product features. Some of the most successful brands, however, use a loyalty program, which has proven itself to be an effective method for fostering loyalty and growing the market.
The popularity of loyalty programs has grown considerably over the years, especially within business circles. Why? Simple. Because it’s cheaper to employ and it generates a large share of revenue for businesses.
So instead of focusing on getting new customers, loyalty programs go after a brand’s existing users and buyers. Studies on the subject would prove that the cost of keeping a customer is lower than the cost for acquiring new ones.
These programs assume that the more you reward your customers, the more likely it is for them to make future purchases and/or encourage others to do the same. Loyalty programs then are also great for getting new leads. A Bond Brand Loyalty program report in 2016 even went as far as reveal that 73 percent of loyalty program members are likely to recommended brands with loyalty programs to their friends.
Businesses who are thinking of utilising and creating their own rewards scheme must understand the psychosocial drivers behind its huge success. You may call this a review on “consumer science” or just its common moniker “market research”. Whatever you call it, you know one thing for sure—it’s pivotal to staying relevant.
Adam Toporek, a renowned Customer Service expert, also listed some of the important psychological principles that guide loyalty programs; our need for reciprocity, commitment, and an aversion to loss. Those human drivers essentially feed the marketing strategies of businesses as they influence most purchasing behaviours. So the more you in invest in market research, the better it will be for your brand to determine what makes your intended audience tick.
Customers generally join loyalty programs for the discounts and freebies; they are likely to engage with brands that have special offers extending far beyond the transactions. Everyone just wants to get the best value for their hard-earned money and Collinson Group also drives this point; according to them, 64 percent loyalty program members from the U.S. use it to save money on purchases. So the more points, rebates, and discounts they receive, the more likely it is for them to return to your brand. This return purchases eventually turn to a steady flow of traffic that generates steady streams of income.
Customers want to feel recognised for doing things, and as market research suggests, they also want to be recognized for purchases and engagement. This is why most loyalty programs in existence reward various consumer activities like referrals or page visits. It’s a win-win situation for both the buying public and the brand as it not only exposes your product to more people, but keeps existing consumers engaged to continue patronage.
Aside from recognition, others love the speck of exclusivity that comes with these reward schemes. There is an appeal to having the upper hand against other customers. It’s in our nature to want things only a few people have access to; to feel like we belong to the “chosen few”. So markets capitalise on this inclination and stroke our desire for exclusivity.
As a tie-in to the point above, the market today also wants high product- and service-personalisation since people want to feel special. When understanding what exactly makes for a successful loyalty program, analysts are quick to pinpoint data as the “holy grail”. By gauging data collected through loyalty schemes, businesses can then personalise packages and target promotions that keep their offerings at par with the needs of their market.
When you create a loyalty program, remember that it must be about your audience. Loyalty programs require insight into the behaviours of your market and the trending buying behaviour of people within and outside your industry. Finally, your customers must always leave with the feeling that the benefits you offer, way beyond transactions, outweigh the costs they incur.