The What, Why and When of Customer Loyalty Campaigns
If an extensive and complex subject like customer loyalty could be summed up in a few words, it would be –
“Loyal customers, they don’t just come back, they don’t simply recommend you, they insist their friends to do business with you.” – Chip Bell, Founder, Chip Bell Group
Statistically speaking, a loyal customer brings in more revenue than an average customer, even a 5% increase in retention rate can hike up profit margin by 25% -95% as per a study by Bain & Co. Let’s take a look at another study. InMoment says that 60% of loyal customers purchase more frequently from the companies they are loyal to which has a direct impact on customer lifetime value. Loyal customers are persuasive and can positively influence many more within their network. This is precisely why, brands, globally, invest in customer loyalty campaigns.
The Importance of Customer Loyalty Campaigns in Business Practises
Customer loyalty campaigns are marketing strategies that are designed to acknowledge and reward repeat purchasers as an incentive for staying associated with the brand. It is a tried-and-tested strategy that has been around for years and many well-known and successful brands have harnessed its true potential. Loyalty campaigns give a competitive edge along with many strategic advantages, listed below are a few.
- A Highly Efficient Engagement Activity – A 2020 Bond Brand Loyalty Report, states that 76% of US loyalty program members believe that loyalty programs drive engagement. Engagement activities are the means of forging a strong relationship between your brand and customers. Customer loyalty programs can play an important role here. A loyalty program basically incentivizes customers for engaging with your brand. The rewards and incentives entice and motivate customers and improve the customer engagement rate.
- Improvement in Customer Retention Rate – According to Incentive Solutions adding a loyalty program to an e-commerce platform can increase average order quantity by 319%. When you keep customers engaged with a loyalty program it has a direct impact on customer retention rate. A retained customer brings more revenue to the company.
- Helps with Customer Acquisition – A Nielsen report states that 92% of consumers believe suggestions from friends and family more than advertising. Loyal customers have strong influence over their network of friends and family. Through word-of-mouth publicity, they can bring in new customers and turn even reluctant customers into loyal customers.
- Improves Overall Customer Experience – Customer loyalty campaigns are perhaps the easiest and effective means to improve customer experience. Buying from brands that have a loyalty program that rewards customers for their purchases improve customer experience and as a result satisfaction levels are boosted. Almost 90% of customers are willing to pay more to receive a better customer experience.
- Improves Customer Lifetime Value – Customer lifetime value or CLV is the gross profit attributed to a customer throughout its journey as a buyer with a particular brand. Customer loyalty campaigns ensure that the customers are associated with the brand for a long period of time. It offers a lucrative barter for the customers to stay associated with the brand which consequently improves CLV.
- Improves Brand Value – Loyalty campaigns improve brand recognition and brand credibility, especially in the long run. They not only add tremendous value to customer experience, but they also help to create a strong and distinct brand identity in the market. This ends up improving overall brand value.
When and Why Should You Initiate Customer Loyalty Campaigns?
- When retaining customers seems difficult – Retaining customers is a difficult task for many brands across the world. With increasing competition and inflation, the customer attrition rate has considerably shot up. If retaining customers is a predicament you face as well, you need to invest in loyalty programs. Loyalty programs keep the customers engaged and by extension retained, for a prolonged period of time.
- When the competition gets the better of you – Customer loyalty campaigns can help you get a competitive edge. When your competitor’s products and pricing are as good as yours, offering them an incentive to shop with you will put your brand way ahead of the competition. It is a win-win for the customers as well as for you.
- When you want to improve customer-brand relationship – Customer engagement is what every brand is after in today’s world. Brands are striving to build a ‘more than just a transactional’ relationship with their customers and loyalty programs provide the perfect stage to do it. When incentives and rewards are involved, customers are keener to receive information and communication from you. Even the reciprocation rate is higher when you have a loyalty program, allowing you to keep your brand on top of customer’s minds through consistent engagement and a healthy customer-brand relationship.
- When long-term brand sustainability is a concern – It is quite challenging to sustain let alone to thrive in this competitive market but with the help of loyalty programs you can keep the ball rolling. When you reward or incentivize customers, you ensure repeat sales. In order to earn more rewards, the customer ends up buying from the brand repeatedly, thereby improving sales and revenues as well as brand sustainability.
How Can Annex Cloud Help You?
Annex Cloud is a global, enterprise that provides dynamic and turnkey loyalty management solutions. With more than 100 pre-built integrations that include industry-leading CX, CRM/ERP, ESP, CDP, POS and other key providers – including Microsoft, SAP, Salesforce, NetSuite, Optimizely, and Qualtrics – Annex Cloud continues to grow, enabling clients to go to market faster and deliver a truly seamless loyalty experience.
To learn how Annex Cloud can help you with bespoke loyalty solutions to meet your marketing objectives, click here.