Marketing is not limited to just print, broadcast, and outdoor advertising anymore. As the competition grows, it has become crucial for brands to prove themselves to consumers in the market by building a strong relationship with the clientele. Dedicated customers not only ensure great sales but often also have a high lifetime value. This should explain why brands heavily concentrate on client retention strategies like loyalty and reward card programs.
Reward programs are a great way to motivate customers to repeat their purchases, in addition to creating long-term behavioral changes in respect to their buying patterns. Reward programs are also effective strategies to promote brand loyalty among customers. A brand loyalist will have a high lifetime value and purchase frequency. A loyal consumer is less prone to deviating from their purchase pattern while being more likely to also influence non-customers to purchase from the brand through organic publicity.
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Types of Reward Card Programs
Among reward card programs, the point program is one of the most widely used. The genius is in its simplicity and effectiveness. The points program is a simple concept – the more you spend, the more points you earn. The points one earns can be redeemed on following purchases and/or may offer discounts on their carts. Points programs offer a great incentive to customers to ‘buy more.’ Many shoppers get obsessed with collecting points; others accumulate a large sum of points but are either disinterested in redeeming them or forget about their points. The latter is a win-win situation for brands.
Example: Starbucks and Uber
Subscription/ VIP Programs
A subscription program is where a customer pays an initial fee or makes periodic payments to get exclusive access to the brand. Subscription reward card programs may offer an extensive range of benefits which can include special discounts or offers, early access to new products and services, and other such perks designed by the brands. The subscription program offers exclusive content and products to its clients, building loyalty among customers.
Example: Netflix, Target, and Amazon Prime
A tiered program is designed with many levels; the customers are motivated to spend more to reach the next platform. Like a video game experience, it works as an adrenaline rush, encouraging customers to keep leveling up.
Example: Sephora and Airlines Frequent Flyer Miles
Many brands incorporate charity programs as an extension of their corporate social responsibility. This program works on the ‘feel good factor’ that is generated through charity. Instead of offering incentives to the customers, it urges them to associate with the brand or purchase from it for a charitable cost. In such programs, a dedicated amount from the profits is donated to a charity chosen by the brand.
Example: American Express and The Body Shop
Pros of Efficient Reward Card Programs
Customer Retention – Reward programs encourage customers to buy repeatedly from the brand in lieu of rewards and incentives. Not only this, but it makes the customers feel valued and appreciated, seeking to turn them into brand advocates.
Increases Customer Lifetime Value (CLV) – CLV is the forecasted net profit generated by the customer throughout their life cycle. Increased customer retention boosts CLV significantly.
Gives an Edge over Competitors – Even if consumers like your products, there is a high probability of them purchasing from your competitor, either to explore more brands or just to change things up. Offering them an incentive to purchase through smart reward card programs will help you to gain an edge over your competitor and encourage customers to buy from you instead.
Get Organic Publicity and Referrals – Repeat customers are a great way to generate organic publicity and referrals. If a customer is a content with your products, service, and reward card programs, he/she is bound to refer your brand to friends and family.
Build a Better Relationship with your Consumers – Reward programs offer a great opportunity for brands to connect with their customers, even after the transaction. Reward programs form a strong foundation for building a healthy and lucrative brand-consumer relationship.
Cons of Reward Card Programs
Execution and Maintenance Cost – In order to set up an efficient loyalty program, you will need a reliable and experienced partner to execute it. A good partner can help you gain maximum benefits of your reward card programs, whereas a dubious and inefficient partner may unnecessarily raise company costs.
Difficulty in Identifying Loyal Customers – More often than not, repeat customers are more likely to turn to brand loyalists but it can be challenging to identify the motive behind their purchase. If a reward program is the only incentive for a customer to purchase from the brand, he/she will probably deviate from the brand if they get a better discount from the competitor.
Inconsistent Revenue – A good reward program may considerably increase the revenue, but it’s also subject to change. Changing market situation, customer buying pattern, and customer psychology are all factors that impact revenue generation through reward card programs.
How Annex Cloud Can Help You Reap Maximum Benefits off your Reward Card Programs
Annex Cloud offers an extensive range of loyalty and reward card programs that can be tailored to be best suited to your unique business and crafted in alliance with your brand values. The experts at Annex Cloud will set micro and macro loyalty goals after careful brand analysis that will greatly help with customer retention, influence repeat rate, and even lower the cost per acquisition.
To find out more about Annex Cloud and the services we offer, click here!