Did you know it costs five times more to acquire new customers than it does to retain current customers? And did you know existing customers are 50% more likely to try a new product of yours as well as spend 31% more than new customers?
Whether or not you currently have a loyalty program that encourages your customers to return and conduct more business with you, these statistics from HubSpot, which tracks consumer sales, clearly show the importance and impact of a successful customer loyalty program.
One of the main reasons to promote customer loyalty is because those customers can help you grow your business faster than your sales and marketing teams. There are a number of other reasons why customer loyalty is critical to your success.
Customers convert and spend more time and money with the brands to which they’re loyal. These customers also tell their friends and colleagues about those brands, which drives referral traffic and word-of-mouth marketing.
Customer loyalty also fosters a strong sense of trust between your brand and customers. When customers choose to frequently return to your company, the value they’re getting out of the relationship outweighs the potential benefits they could get from one of your competitors.
There is a clear need for loyalty programs in the retail industry. However, rather than mimicking current programs, which will only lead to a competitive stalemate and increased costs all around, retailers — both those planning to introduce a loyalty program for the first time and those wanting to tune up their existing program — should design loyalty program offerings to yield true competitive advantage.
But research also shows that loyalty programs shouldn’t focus solely on cheaper prices and giveaways. According to data insights firm LoyaltyLion, customers are looking for loyalty programs that reflect their personal standards. For example, the company’s data shows that 66% of people will join a loyalty program if it builds an ongoing relationship. Sixty-eight percent of loyalty cardholders want to align with a retail company that shares its values.
Personalization is a key loyalty trend for 2021. The “Bond Loyalty Report 2020” found loyalty programs that offer high levels of personalization throughout the membership experience see significant increases in word-of-mouth, increased spending and customer retention.
“At its base level, the loyalty program is a way for retailers to understand their customers beyond a cash transaction,” said Pat Lewis, a partner with Oasis Stop ‘N Go, which operates 25 stores in Twin Falls, Idaho. “It’s extremely important to recognize your loyal customers and how important they are to your business. Our goal is to create unique and memorable experiences to show our appreciation for their business.”