When researching loyalty programs, it's important to discover what effect they will have on your business. How will they leverage your most loyal customers? When is the best time to introduce a loyalty program to your customer? Will your business actually benefit from implementing a rewards program? The web contains a lot of statistical information that supports the basic idea behind loyalty marketing – rewarding your loyal customers will increase your business. It doesn’t just mean rewards either. Taking the time to get to know your customers and connect with them is important for loyalty success.
Wondering if you should invest in loyalty marketing? Here are 3 basic benefits to loyalty marketing before you invest in this dynamic tool.
1. Customer Retention - This is where most of the value you get from a loyalty program. Your program creates "fences" around your customer to build preference vs your competitors. (See #3 below)
2. Customer Growth - Getting "more" from your current customers. Some refer to this as share of wallet which reflects only dollars share, but try to think of this a more broadly. Mind-share, share of the conversation and "recommendation" or "like" share can help grow your business. But from a Rewards program point of view, growing revenue share is your best ROI that you can measure. (See #2 below)
3. New Customers - Creating a strong value proposition, making it easy to join, and provide relevant communications will help your program continue to attract new customers. But hey, we all know that "word of mouth" is the best advertising so just make sure your current customers are happy and you're all set! (See #1 below)
Here are 5 customer loyalty statistics and their takeaways that support the importance of loyalty marketing and connecting with your customers.
1. Gain Loyalty From First Interaction
48% of consumers say that the most critical time to gain their loyalty is when they make their first purchase or begin service. - ClickFox 2012 Brand Loyalty Survey
First impressions really are everything. Make the biggest impact by practicing good customer service with every customer from the beginning of their journey.
2. Loyal Customers Spend More
Returning customers spend on average 67% more than first-time customers. - Bain and company
Focus your efforts on the portion of your customers that brings the most business - the most frequent and the most loyal. Acquiring new customers costs more and reaps less reward. Although both are important, loyal customers will bring your business more sales in the long run.
3. Loyal Customers Make Your Business Successful
Up to 15% of a business’s most loyal customers account for 55-70% of the company’s total sales. - The Center for Retail Management at Northwestern University
This stat has the same idea as the one listed above, but we thought it was important to mention. Not only do they spend more than new customers, but only 15% of your most loyal customers bring in over half of your store sales. That's incredible.
4. Communication is Key
94% of loyalty program members want communications from the programs they participate in. - Maritz 2013 Loyalty Report
Don't just offer rewards to your customers while they are in-store. Continue to communicate with them on a regular basis - updating them with current offers and keeping your store top-of-mind constantly.
5. Relevancy Matters
Only 31% of Americans find rewards program communications to be extremely relevant. - Colloquy 2011 Loyalty Census
Loyalty programs can enable you to collect information on your customers so that you can tailor texts and emails to each person. Make sure you comminicate relevant offers pertaining to what your customer wants.
If you haven’t started connecting with your customers, now is the time. Your loyal customers are important to your business and want to hear from you. Whether it is text marketing, email marketing, a customer rewards program, a referral program or special promotions, there is a way for you to connect with your loyal customers that makes sense for your business.
If you're thinking about a loyalty program, download our free whitepaper for answers to the top 8 questions to ask before you start a customer loyalty program!
Editor's Note: This post was originally published in July 2013 and has been completely revamped and updated for accuracy and comprehensiveness.