Why Customer Loyalty is Not Just About The Money

July 3rd, 2022

Loyalty programs are great ways to reward customers and encourage repeat purcTheyt, they are considered one of the most effective marketing state businesses need to build strong relationships with their customers. If you want to retain your current clients and attract new ones, then you should consider offering them incentives. This is why companies such as Starbucks and Amazon offer rewards and discounts to loyal customers.

Whilst these traditional forms of customer incentives are important, they're not the only way to build trust between you and your customers. More importantly, everything you do to instil that trust is building a much more valuable connection with your audience. It's not just about you getting money from them or giving discounts to you. 

Why customer loyalty is very important in business

Loyalty programmes build an emotional connection

Brands can build an emotional connection with customers by tailoring their offerings to each customer. They can use this connection to reward customers for completing valuable actions, like spending more money, coming to a store more frequently, downloading a mobile app, or referring friends.

Loyalty programmes can also change consumer behaviour. Consumers prefer brands that build relationships with them rather than simply offering benefits. Studies have shown that 79% of shoppers will only consider a brand if that emotional connection has been made. Loyalty programmes that promote feelings of belonging and exclusivity can influence brand adoption. Customers often join loyalty programmes specifically to experience these benefits. For these reasons, loyalty programmes are a key component of any successful marketing strategy.

One of the most successful in recent years has been the British mobile phone company, O2. They have capitalised on the 'experience' market and partnered with various entertainment venues to give customers discounts and offers on trips to the cinema, concerts and their website boasts:

"Priority Tickets to thousands of gigs and events across the UK, up to 48 hours before general sale."

By doing this, O2 becomes the facilitator for their customer's enjoyment. Why would you want to move away from a brand if it is delivering you a better social life?

Repeat customers have a high ROI

Repeat customers are just more likely to buy from you again... They typically spend more money than new ones do, and they are more likely to spend it on higher-priced products. They also trust you more because they already know what to expect from you. Therefore, repeat customers are an excellent investment for businTheyt, they can be as high as 70% more profitable than new ones!

There is an old adage: "Acquiring a new customer can cost five times more than retaining an existing customer."

Usually, you would only hear that when talking about customer retention rates and customer acquisition, but the same is true for general sales as well. 

Studies show that satisfied customers are four to seven times more likely to make a repeat purchase than new ones. The ROI on repeat customers is even higher if you dedicate some of your employee resources to serving these customers. So, keep your current client base happy because the more you serve them, the more they will serve you.

Loyalty helps you reach new customers

While customer loyalty is a great way to reach new customers, it is not enough to simply retain your current customers. Developing a strategy to increase customer loyalty is essential as well. Your brand's marketing plan should lay out the aspects that will make it stand out from the competition and align with your customers' core beliefs. By doing this, you can build a lasting customer base that will continue to support your business over time.

Customer lifetime value is one of the best metrics to track. This metric measures how often a customer has purchased something from you. If you have a high CLV, this is an indication of a loyal customer. The more valuable they are, the more money you'll make from them over time. To measure customer lifetime value, take a look at the average number of purchases made by a customer over a lifetime.

As well as this, the most loyal of your customers will quickly become brand ambassadors. These are people who recommend your product or service to others. You could use surveys to find out which brands are the most popular amongst your clients. Then, try to get those people to talk about your brand online. It may seem like a small thing, but word-of-mouth advertising is still one of the strongest forms of marketing available.

Loyalty programmes deliver customer insights

As you should have noticed from the last few paragraphs, the benefits of loyalty programmes extend far beyond the money you can earn.

For example, customers can be segmented into different groups based on their shopping habits. Customers who buy the same products in the same places tend to cluster together. This means that retailers can target specific types of customers with tailored offers and promotions. In addition to this, customer data can help companies identify trends, such as seasonal changes in consumer spending patterns.

By using data analytics, retailers can also gain insight into what motivates customers. For instance, customers who bought a particular item might be more interested

In a recent study by GI Insights, a vast majority of UK consumers are members of at least one loyalty programme. Of those members, only 47% remain active, and only 27% say they feel brands analyze their needs. To win the trust of customers, loyalty programmes must deliver valuable value and incentives. Once customers become members of a loyalty programme, they'll provide personal information that you can use to track their behaviour. Big Data from this data can provide valuable insights.

How do loyalty programs influence current and future demand?

In today's increasingly competitive marketplace, how do loyalty programs affect current and future demand? By focusing on the emotional needs of customers, loyalty programs create a unique customer experience and help businesses compete on price alone. To sell products that customers want, companies must appeal to their emotions to build brand loyalty. Customer loyalty benefits may be surprising and rewarding, or they may reward customers for choosing a particular brand over another.

Many credit card companies have used lotteries to increase response rates among new customers. Some even reward talk, offering free airline tickets or a $50 check when new customers switch from their current service provider. This tactic, however, doesn't go far enough. Companies should reward profitable customers with better incentives, including higher-margin private label items and full price. While these programs may hit the numbers for the organization, they still run the risk of alienating customers and reducing their profits.

Brand advocates help the company by recommending the product or service to other people. They also use their social networks to spread the word about the store. Hence, a loyalty program is an effective strategy to create a strong network of advocates. Word-of-mouth recommendations are the most trusted form of marketing, with 92% of people trusting the opinions of others. Approximately half of all purchasing decisions are made based on these recommendations.

Customer loyalty surveys have found that nearly half of consumers would switch brands to a brand with a better reward program. Further, 52% of customers said they prioritize brands that offer rewards for loyalty. This means that loyalty programs are essential to retaining and attracting customers. So, how do you create a high-value customer relationship?

While consumers are increasingly demanding personalised offers, they're still not universally loved, only one-fifth of consumers in Germany and the UK see personalised offers as a key benefit of loyalty programs. And yet, if these offers are truly personalized, they'll cut through the clutter. Relevancy drives revenue. Millennials, on the other hand, are increasingly willing to trade down if they get the right rewards.

To create a profitable loyalty program, companies must understand the psychology of consumers and what motivates them to make purchases. The rewards should be both desirable and attainable. To build a customer loyalty program, start small by offering small rewards, and gradually increase the value of these rewards as they go up the loyalty ladder. Eventually, as more people accumulate loyalty levels, they will purchase more goods. The reward can be as high as 20% of the purchase price, but the points will be a waste of time.

As mentioned, customers are increasingly discerning, and they want to do business with innovative companies. This means making sure that branding, marketing, and product evolve along with the customer's needs and wants. It's not enough that you have a base of loyal customers; a company must be innovative. Whether it's a fast-food chain, a luxury hotel, or a boutique, a customer will be more loyal to a company that keeps improving.

What Reward Programs Can Digital Marketers Use?

In addition to traditional methods like coupons and rebates, digital marketers can leverage the power of gamification to engage customers and drive conversions. Gamification is the practice of using game mechanics (such as leaderboards) to motivate behaviour change. For example, a customer could earn points for every dollar spent at your eCommerce site. These points can then be redeemed for discounts or other benefits.

Gamification isn't just limited to online retailers. Retailers such as Starbucks, Nike, and Apple have implemented gamified loyalty programs that encourage customers to share photos of themselves enjoying their products. These programs are great ways to encourage sharing and engagement, which ultimately leads to increased sales.

Gamifying loyalty programs doesn't mean that the rewards need to be virtual. Companies can also incentivize customers to take action offline by rewarding them with real-world experiences. A good example of this is the airline JetBlue's "Fly Blue" campaign. Customers who book flights from New York City to Boston and back were able to win tickets to a concert in Boston. By combining social media engagement with physical rewards, JetBlue was able to increase its brand awareness and drive traffic to its website.

And, of course, getting your customers to share information on social media is a fantastic way to drive people back to your products. 

Whilst some traditional loyalty methods (such as loyalty cards) might not work as well digitally, no doubt building loyalty and using incentive schemes and other tools can have a massive impact on your business and its bottom line. 


The key takeaway here is that you need to focus on creating positive experiences for your loyal customers and loyalty schemes are a great way of doing that. They're easy to add to your current marketing campaigns and can help you retain customers for longer. However, if you don't get the balance right between the two, you'll lose out.

A successful loyalty scheme has to offer something extra to customers beyond simply earning points. That's the kind of thing that massively boosts your customer satisfaction. You need to think about how you can make the most of your existing customers' loyalty and use that to attract new ones. And remember, it's all about the psychology of your customers -- the things that inspire them to buy from you rather than someone else.

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