Loyalty Solutions and their Impact on Businesses
What do Reebok, Starbucks, and IKEA have in common? All are leading players in their respective industries, and each has a strong brand following.
That powerful brand loyalty distinguishes them and puts them way ahead of their competition, giving the brand an almost cultlike status in some markets. Thanks to their highly efficient loyalty solutions, these companies have been successful in accumulating a strong base of loyal customers.
To understand how both loyalty solutions work and how it’s a stepping stone of financial growth, let’s delve into what brand loyalty means and how expedient loyalty solutions give momentum to brand credibility, revenue, and sales.
Brand Loyalty and Loyalty Solutions
Brand Loyalty is when a customer chooses to associate with a particular brand repeatedly over its competitors. The purchase behavior is influenced by various factors other than price, packaging, and even quality. Brand loyalty stems from deep-rooted trust in the brand, long-term association, and emotionally triggered factors.
Loyalty solutions are strategically designed initiatives and programs that are tailored to engage customers, encourage repeat purchases, generate trust and loyalty, and suitably reward loyal customers for long-term returns.
An experienced loyalty solution partner will create an effective loyalty strategy by carefully studying analytics and data, considering brand image and core values, and studying the audience demographic thoroughly.
How Can Brands Benefit from Expedient Loyalty Solutions
- Aids in Customer Retention along with Acquisition – One of the prime benefits of adopting loyalty solutions is that it aids in improving customer retention. Well-planned loyalty programs successfully keep the customers engaged. Customers enrolled in the program tend to repeat their purchases in order to earn more rewards. Not only this but exciting loyalty rewards and benefits can also help in acquiring new customers.
- Increase in Sales and Revenue – The 80/20 rule of the Pareto Principle, named for Vilfredo Pareto, suggests that 80% of your company sales come from 20% of your customers. The 20% here refers to loyal customers and their repeat purchases. An experienced loyalty solution partner can design programs that will immediately show improvement in sales. A good program is bound to motivate customers to spend more so they can earn more benefits. The customer gains access to great deals and bargains when enrolled in a loyalty program, thereby trusting the brand more than they did earlier and seeking more opportunities to transact with them. A five-year study by Brand Keys on retail, automotive, and restaurant sectors show significant improvement in loyalty gains (depicted in the graph below)
- Improvement in Customer Experience – Designing a loyalty program gives a brand access to valuable customer data. This data is accumulated to allocate rewards and enhance customer experience; additionally, it can be used to streamline processes and create an omnichannel customer experience. The customers feel valued and receive quicker service and value for the money through omnichannel loyalty, loyalty offerings, and enhanced customer experience.
- Better Engagement – Communication and customer engagement are key to building a strong bond between the brand and its customers. Efficient loyalty solutions can significantly improve customer engagement. These solutions will also help in developing relevant content that has a high click-through rate and offers better ROI.
- Improved Customer Lifetime Value (CLV) – Customer lifetime value is the revenue generated by a customer throughout their journey with a brand. Smartly designed and managed loyalty solutions greatly improve CLV by keeping the customers engaged with the brand for a prolonged duration. With the data accumulated through the program, you can study customers’ buying patterns and provide timely impetus to further encourage repeat purchases.
- Brand Advocacy – Satisfied customers are vocal about their preferences, which positively influence their network as well. According to a report by HubSpot, “81% of customers trust recommendations from family and friends over those from companies.” Efficient loyalty solutions also help to acquire new customers through organic publicity or simply by the inclusion of referral programs as a part of their loyalty offerings.
To learn more about the significance of brand loyalty and its effectiveness, click here:
The Drawbacks of Loyalty Programs
- Additional Expense – Loyalty programs and solutions may be viewed as an additional expense and a time-consuming venture by some companies. To create and initiate an efficient program, you will need to consult and hire an experienced loyalty solution partner. A good loyalty solution partner will launch, manage, and monitor the loyalty program for you, thereby saving time and offering better returns on your investment.
- Customer Acquisition Plans may Take a Backseat – Although loyalty programs may attract new customers, they are more focused on customer retention. Companies that focus their attention solely on improving customer retention rates tend to overlook new customers and may not pay enough attention to customer acquisition.
- Management of Data Can be Tedious – Data collection and management ensure a smooth running of a loyalty program. To make the most of your loyalty program, you will need to analyze your data post-haste; it can be tedious and time-consuming but is nonetheless important. This is where a loyalty solution partner who can help you can save you headaches and heartaches. A proficient loyalty management agency will take the load off you, ensuring seamless execution and smooth management of the loyalty plan.
- Market Saturation – Many companies and brands have opted for loyalty solutions in the past two decades. The competition is intense, making it increasingly difficult to stand out in the crowd. However, customers show massive favoritism towards brands that offer loyalty programs with exciting rewards. The idea is to create an innovative program that is simple, yet highly efficient and one that offers a better customer value.
How Does Annex Cloud Help Businesses?
Through its convenient loyalty platform, Annex Cloud offers the largest portfolio of customer loyalty capabilities, tailored to suit specific brand requests and represent the brand’s ideologies effectively.
With implementations in 50+ countries, Annex Cloud’s technology and expansive partner ecosystem are proficient in delivering hyper-personalized customer experiences at every touchpoint.
Annex Cloud’s technology stands out particularly due to the aforementioned personalization and customer analytics, making it easy for users to take advantage of predictive models and see how campaigns impact customers’ purchase patterns.
To find out more about Annex Cloud and our extensive range of services, we invite you to connect with our Loyalty Experience Manager: