You’ve probably heard of loyalty programs before. If you have not, chances are you have at least heard of club cards, loyalty cards, rewards cards, or points cards. Their use is widespread and the average US household has 21 loyalty programs.
Companies try to add consumers to their loyalty programs and offer rewards to them for using it. These programs are a way for companies to encourage their customers to spend more in their stores or use their services more often.
These rewards are usually discounts on products and services a company offers.
And they’re proven to increase revenue!
Here are some useful stats for you:
- The probability of selling to an existing customer is 60-70%
- The probability of selling to a new customer is 5-20%
- If a business can retain each of its customers for an average of just one additional month, they can achieve an additional 3% in annual growth
- Loyalty programs can generate as much as 20% of a company’s profit
Loyalty programs are like a club people can choose to be a part of. Companies can then offer club members discounts on food and other items or points towards future purchases. There’s a good chance your local grocery store has some form of rewards program you can join.
For instance, in Arizona, grocery stores offer gas rewards, which is a point for every penny spent on most goods. Accumulate 100 points and you get $0.10 off per gallon of gas at participating gas stations!
These programs are usually free for consumers to join, too. But to implement and run them, businesses have to pay for this service.
If you want your customers to join your rewards program, all they have to do is fill out a form and you give them a rewards or points card. Nowadays, though, it’s an app they just download onto their phone.
But, if you were to go the old school route, the loyalty cards have a magnetic stripe or a barcode on the back you either swipe through a card reader or scan when you buy something. These are most common in grocery stores, still.
Some cards have electronic chips in them or proximity technology built in. Some are small and can attach to your keyring like a keychain.
Most modern-day loyalty programs are designed to work off a phone number or mobile applications for consumer convenience.
Every time your customer buys something they simply swipe or scan their card, enter their phone number or scan the app on their smartphone.
You can give your customers a discount on whatever they’re purchasing right then and there. Most commonly, though, is to give your customers points they can use towards other items later.
With some loyalty programs you can store the data of your clients’ purchases and behavior. You use this information about their buying habits to better market your goods and services they’re most interested in and buy most often.
Frequent Flyer cards are another great example of loyalty programs. Airline companies give their members access to certain membership privileges for using their airlines. Those fancy club lounges you see at the airport are one of the perks members have access to. All members have to do is show their frequent flyer card. They can hang out in exclusive member lounges between flights or during layovers.
As a consumer, you might be hesitant to join a rewards program knowing they can track your buying habits. The fact that they also store information about you in their databases can be unnerving, too.
As a business owner, this is valuable information to have. It means you can provide more service and products to people who… wait for it… love your services and products!
There are rules for how much information can be stored about you and your purchasing habits. There are also rules about how this information is used.
Each rewards program has different rules for how a customer’s information is used. You should be able to supply your customers with all this information upon joining.
Some rewards programs are B2B (Business to Business) programs. These loyalty programs give rewards to businesses for purchasing goods or services from suppliers.
You could categorize loyalty programs as a form of virtual currency. The reason for this is partly because the cash flow goes one way. You can exchange rewards points for merchandise or services, but you can’t exchange them back for cash.
You will find different forms of loyalty programs in almost every country in the world. They vary in how they are set up and how they are used. Of course, the companies who offer them are also different from those in the United States.
One of the most common you’ll find in other countries are airline loyalty programs. We all travel at one point or another. Nearly every country’s major airlines will have a rewards program available. They use them to encourage the people who live there to join and use their airlines when they travel.
Companies have recently begun to outsource the management of their loyalty programs. They hire agencies who specialize in loyalty consulting, communications, and data analytics to manage their programs.
The programs are all different and tend to be rather complicated. Companies hand over the management to those agencies who specialize in loyalty program tracking. This frees them up to focus on other business needs.
It’s so much easier to sell to someone who is already a customer than it is to get a new person to buy from you. It’s far more cost-effective, too. You don’t have to run marketing and advertising dollars!
Loyalty programs are worth checking out to see if one will be a great fit for your business.
Here are some of the major players:
- Five Stars
If you’re still not convinced on why you need loyalty program—let’s go back to the basics…
Loyalty program definition: Simply put, it’s a program designed to make your customers more loyal to you. In short: It’s about customer retention or customer loyalty.
Now, did you know that loyalty is among the most important assets that you can have for your business?
If you have loyal customers—that means you’re actually doing something right with your business. In fact, these loyal customers of yours can actually make you more successful!
As mentioned earlier, loyal customers are actually easier to deal with. They are more willing to buy from you, compared to new customers. In fact, they’re more willing to spend on your products and services.
But why is that?
Well, because they trust you and your business.
Incidentally, this is what makes loyalty programs essential for businesses. After all, loyalty programs are about building relationships with your customers. It’s about making them understand that you and your business are there to help them.
There are various types of loyalty programs existing today…
If you look closely, you’ll see that there are quite a number of different loyalty and rewards programs out there today.
But in essence, all of them pertain to one thing: It’s about making your customers feel more loved. It’s about showing people you (the company) have them (your customers) in mind.
And the end result?
Greater loyalty. Better relationships. Increased trust. More profits.
So, what is a loyalty program? It’s all of these—and more.
Yes—whether you’re using a digital loyalty program or the old school rewards program we’ve grown accustomed to, your business can benefit from it. Significantly.
Of course, don’t think that loyalty programs are just about enticing people with your loyalty rewards, freebies, and prizes.
Nope, it’s actually more than that.
Remember that loyalty programs are a business strategy. As it is, you need to take careful note of the necessary details. Otherwise, you might get lost and confused—and you’ll lose sight of your goals.
First things first: Make sure to understand your audience. This is an important part of the process. The more you understand your customers, the easier for you to find the right approach and strategies to use for your program.
Next step is to convey the right message. Don’t think that just because you have freebies, that your target market will automatically be running through your doors to join the program. If you do, then you’re underestimating your customers.
If you want your loyalty program to succeed—you need to exercise finesse.
Try to convey your message in a more interesting, convincing way. Look into what your customers really want, and take advantage of that. Accordingly, this can help you spread the right message across, ultimately allowing your audience to get a deeper understanding of what your business is offering on the table. And once they get your “drift”—they are bound to appreciate your offers even more.
Here’s one more thing: Regardless of what your loyalty rewards or perks are—make sure to offer people something that they can actually use, like a discount or something free.
Don’t go for the usual promotional items (that people can’t really use). Provide people with perks that actually offer them value. Make sure to use only high-quality items—and nothing less.
Remember: Your loyalty program actually reflects on your company. As it is, you better make sure that you are taking the right steps and conveying the right message to your target market. This is the only way to ensure that your strategy will take you all way to the top.
Now, if you aren’t really sure on the steps or procedures to take for your loyalty program, don’t fret. There’s a lot of help waiting out there for you.
In fact, we at RedFynn can help you out, if you want.
We are in the business of helping businesses.
And if you need help with your strategies—whether it may be for understanding what a loyalty reward is, or knowing the more intricate details of running a loyalty program—you can rest assured that we’ll be there with (and for) you every step of the way. Call (888) 510-9871 to get help now.
To learn more, visit www.redfynn.com. Or call us at (888) 510-9871