You’ve read the reports. You’ve heard it’s a good idea to start a loyalty program for your business. But if you’re being honest, you’re not sure it’s worth the effort—it sounds like a potential waste of time and resources. After working with a wide variety of merchants over five years, I’m here to tell you: it’s absolutely worth the effort to start a quality loyalty program. In fact, if done well, it could be the single best thing you do to increase customer visits and revenue.
Why? A good loyalty program is about driving profits, creating repeat customer visits, and building success in a long-term, organic way. It’s also something that customers are going to expect more and more of in the future. Here are four reasons why a loyalty program should be part of your strategic plan—and how it is a key tool to expanding your business:
The hotels offer the proof
Modern Restaurant Magazine recently noted how retail businesses should be watching and learning from the hotels around them. Marriott has been trailblazing the loyalty rewards space for a decade now. When Roger Dow first created the loyalty program and ran it by Bill Marriott, the pair found a lot of resistance in the company when it first rolled out.
“They called it a high-cost, ineffective program,” said Dow. “I stuck out my neck on this one, and fortunately, I had the support of the big guy. Once it got its legs, it took off like gangbusters. Today, Marriott Rewards is a multibillion-dollar enterprise within an enterprise.” The hotels learned from the airlines, and today you can learn from both industries. This is no longer a program only for the big guys.
Why does it work so well? When you offer a loyalty program, you are incentivizing the customer to think of you first. As Modern Restaurant writes, loyalty programs are filling nearly 80% of hotel bookings via hotel websites. They also allow the hotel to have a clear, direct and personal conversation with that significant audience base. “Imagine if [your business] was able to identify and motivate 80 percent of your business through customer engagement via a loyalty program” writes the magazine.
This is such an important point: When people head to a certain area, you need to make them feel that visiting your restaurant or retail store makes the most sense. You need to encourage them, make them feel like they’re your partner as opposed to a transaction, and that they’re investing in future savings by shopping with you. As we’ve seen with many Instore merchants, this can set off a domino effect of more frequent visits and higher spend.
Which leads us to the proven fact that repeat customers spend more. At its heart, a loyalty program is about customer retention. There are plenty of stats to cite here: Bain has reported that in the online marketing space, if you increase your customer retention by 5%, you can increase your profitability by up to 95%. It’s a well-proven fact in business that if you nurture loyal customers, you are laying a foundation for rigorous, long-lasting success because those customers will spend more over time. So take the time to design a program that will bring these customers back again and again. If you need help, give us a call.
Being aligned with the future
Loyalty programs are not going away. A study in 2014 by the social engagement platform Dailybreak Media showed that 83% of respondents said they belonged to one or more brand/store loyalty programs (13% said they belonged to five or more). And 58% of respondents buy from the stores and brands whose loyalty programs they belong to at least once a month. The Australian report, For Love or Money 2016, revealed that 56% of members believe brands need loyalty programs to drive engagement, while a notable 68% of millennials thought the same. The younger generation is totally aligned to loyalty programs, ever on the lookout for good deals. To capture the hearts, minds and wallets of millennials, you need to meet them where they are, on digital platforms and offer deals that benefit them and delight them.
It makes great business sense to launch your own loyalty program. And as you do it, make sure it works across all channels, at all your locations. Weave it seamlessly into your overall branding so this doesn’t feel like an add-on, but a secret inner circle that is at the heart of your mission and customer experience. Let us know if we can help!
Dig further into our tips on how to set up the loyalty program so it’s optimized, clear across channels, and making you money everyday.
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