9 Benefits of Loyalty Programs
Most business owners struggle acquiring new customers. That is and has been a constant battle of business owners since the beginning. However, many spend good time and money trying to attract new customers and often overlook the savings that can be had by just retaining their most loyal customers. Rewarding the best customers of a business is a simple concept, but knowing who those best customers are and enticing them to return to a business over and over again is the challenge. There are many benefits of loyalty programs. Here are nine detailed benefits any good loyalty program will feature.
1. Retaining existing customers According to an independent study done by Bain & Company, it can cost 6-7 times more to acquire a new customer than to retain an existing one. A good loyalty program provides a practical reason for a customer to continue to buy. At the same time, the program provides valuable information about the business’ best customers. Once a business knows what its customers really like, they can continue offering similar products to carry the cycle forward. For example, when a restaurant finds out their customers respond more to a FREE dessert versus a discount, they can offer new desserts as a means to bring those customers back who haven’t been in a while.
2. Acquiring new customers A loyalty program should also be able to attract new customers. An exciting reward offered for signing up can bring new customers to the business, especially when advertised, although word of mouth spreads quickly when a reward is particularly exciting. A good loyalty partner or provider will also help to get the word out to promote the new sign-up offer.
3. Win-back “lost” or “missing” customers Businesses actually have a better chance for success in retaining “lost” customers than they do when attracting new ones. This is true because a good loyalty program will allow a business the means in which to talk directly to a “lost” customer. Even if the customer was not happy the last time they visited, a nice “We miss you” text message with a special offer could be just want the customer needs to come back and try it again!
4. Increasing Customer Lifetime Value The Customer Lifetime Value (CLV) ( or often CLTV), is a prediction of the net profit attributed to the entire future relationship with a customer. It is an important measurement of the actual worth of a customer. It measures the customer’s worth now but also figures their worth over their projected lifetime. A good loyalty program will increase this CLV.
5. Marketing directly to your best customers Businesses find greater success when marketing to their best customers than they do when marketing to a broader spectrum of people. The best customers already like the product and do not require as much of a push to return. When a business can speak directly to their best customers, they find it easier to fill a new event, launch a new product or simply bring in traffic on a slow day.
6. Creating Word of Mouth advertising People love to tell their family, friends, and associates about deals that please or satisfy them. Word of mouth advertising is probably the most convincing form of advertising as a personal recommendation is much more believable than an ad seen somewhere. A good reward is given for a certain number of visits or great “Thank You” offer can excite a customer enough to make them become an advocate for that business.
7. Reducing advertising costs A good loyalty program will reduce the amount of flyers or ads a company needs to spend money creating. To run a good newspaper ad, a business may need to hire a designer or ad agency & pay the newspaper or radio station. Then they hope enough potential customers hear or see the ad to come and spend enough to pay for the ad costs. As the loyalty program builds and the subscriber list grows, the company has less need for such advertising because they can simply send a text message to all their best customers who subscribed to the program.
8. Beating the competition A good loyalty program is an easy way for small businesses to show their personal side and remain competitive in areas where bigger, chain businesses may dominate. Many customers may go to the bigger businesses simply for their loyalty rewards, even though they may not love the product. Now, smaller businesses with better products can offer the same or better rewards and have more of a chance to compete against the chains.
9. Loyalty programs are low-cost Small businesses don’t have to empty their budget to start a quality loyalty reward program. They no longer have to waste time and money printing cards or buying ink.
TL Connects provides a mobile-based loyalty program at prices as low as $49/month. This includes the ability to set a sign-up offer, a loyalty reward item, send “We Miss You” texts and send textALERTS to all subscribers at once to promote an event, new product or just fill a slow day. It also features an analytics program allowing owners to track their campaign results to see which campaign/offers work best. To get more info, schedule a demo of the program now.A Nashville-based company, Juice Bar, has great success using TL Connects’ digital loyalty program.