A great loyalty program can benefit both your business and your customers. You get a recurring revenue stream and your patrons get rewards, perks, and access to an exclusive club. They, in turn, think good thoughts about your company and are likely to spend more (and bring friends).
A loyalty program also allows you to rally your best customers in challenging times, assuring them that you'll continue to be up and running now and after the storm passes.
But before you dive into the loyalty pool, it’s a good idea to get a snapshot of why people are drawn to them:
- Special offers and discounts (43 percent)
- Free merchandise (27 percent)
- Unique perks (10 percent)
- Benefits available only to members (9 percent)
In short, loyalty members already love your work—they just want access to it at a special rate.
So why does your business need a loyalty program?
1. Your Customers Will Stick with You
It sounds simple, but it’s still worth saying: Businesses that have a loyalty program usually end up with more loyal customers than those that don’t. In fact, almost 80 percent of buyers will stay with a brand if it has one.
Legacy brands across industries have learned this lesson and have launched programs including Domino’s Piece of the Pie, Amazon Prime, Hilton Honors, and Alaska Airlines’ Mileage Plan.
2. Loyalty Programs Make Shopping Easier
One major perk of loyalty programs is that they make the shopping process faster and easier. By their nature, these programs gather customer data and can easily populate it when searching for products or checking out. They can also nudge the guest to an additional purchase or an upgrade of something they already planned to buy.
Starbucks uses this technology simply and powerfully, allowing members to order ahead and get their points immediately or redeem them on the spot for free drinks. The Nordy Club at Nordstrom takes the fuss out of browsing by letting loyal customers take care of that online and pick up purchases quickly in the store.
Your own business can benefit from these fairly simple features. Whether it’s making suggestions based on past purchases or remembering a customer’s preferred payment method and shipping address, these details show that you’ve taken the time to get to know your audience and respect their time by making the shopping process as smooth as possible.
3. Loyal Customers Spend More
Now that their shopping experience is faster than that of your average customer, many loyal patrons use the time they’re saving to shop more. Repeat customers are the single best tool you have to increase your e-commerce sales. In fact, although they are only 11 percent of your total patron base, they spend 15 percent more than a single-purchase customer and provide 22 percent of your earnings.
4. Loyal Customers Are More Engaged
No matter how long they’ve been your fans, even your most die-hard supporters can be tempted by a newer, shinier object. Rest assured that their inbox receives its share of marketing messages from your competition, laser-focused on their buyer preferences. Step up your email game and they’ll be far more likely to open your messages; loyalty emails boast click-through rates as high as 35 percent.
And your brand-new customers have great potential to become loyalty members—they are 47 percent more likely to buy from you a second time.
5. Loyal Customers Are a Data Gold Mine
In addition to being a reliable source of revenue, a loyalty program is a source of data on what your customers truly value. Give them a compelling reason to give their personal information, such as the aforementioned enhanced shopping experience, and they will continue to provide it.
And it will make them more satisfied customers—eight times more satisfied, in fact.
One of the best ways to build this satisfaction is with a connected POS platform that pulls in purchase and search history. This lets you provide additional perks like discounts on your newest releases and free birthday goodies.
6. You Can Customize Your Program to Fit Your Needs
So what are the nuts and bolts that allow you to build loyalty? Here are some of the most common tools:
- Points. If your customers tend to make small purchases fairly regularly, much like those at Starbucks, Nordstrom, or Target, points can be easy to use and can inspire return visits.
- Tiers. These are good if you want long-term commitments and larger purchases. Look to industry leaders such as Sephora’s Beauty Insider, JetBlue’s TrueBlue, or Marriott Bonvoy for inspiration.
- Memberships. For a one-time $20 fee, progressive outerwear brand REI provides access to exclusive events, private sales, and a percentage of customers’ total annual spending handed back to them as store dividends.
7. Set Yourself Apart
A loyalty program sets the stage for you to have a more personal connection with your customers. Get to know them, and they will be far more likely to invest more in you.
A payment platform like Poynt makes loyalty programs simple, allowing patrons to easily sign up and redeem rewards.