In the US, there are currently 3.3 billion loyalty memberships, according to a report by Accenture. The report also confirms that 90% of companies have some sort of loyalty program or variation thereof. Customer loyalty is important because it can increase profits, improve sales success, and allow for sustainable growth.

A well-designed and well-executed loyalty program can help you retain existing customers, attract new customers, reduce turnover, and drive profits.

What is Customer Loyalty?

Customer loyalty refers to customers consistently choosing a particular company’s products and services over those of its competitors. When customers are loyal to a certain company, their buying decision is not influenced by price or availability. They would rather wait, and even pay more, to get the same quality service and product they are familiar with and appreciate.

A dedicated program that offers customer loyalty benefits is a great way to say thank you. It is obviously good for your customers, but what exactly are the benefits of loyalty programs to a business like yours?

Benefits of Loyalty Programs

Reducing Unprofitable Customers

One of the less frequently considered items on this list of the pros and cons of loyalty cards and programs is that they let companies shed unnecessary weight. A well-designed loyalty program allows companies to segment customers and discover profitable and unprofitable customers.

Relevant Customer Data and Consumer Trends

Consumer data gets recorded in the company’s database as soon as a shopper registers for a loyalty program. Companies can use this data for omnichannel, offline, and e-commerce segmentation, profiling their best customers, and tailoring their offerings to specific groups of consumers.

Retain existing customers

Loyal customers spend, on average, 67% more than new customers. That’s a stat you can’t afford to ignore. At the same time, acquiring customers could cost you at least five times more than retaining existing ones. Apply this thinking to your store, and you can see the positive impact it can have.

Reduce slow seasons

Depending on your industry, there may be slow seasons for your brand. A loyalty program can help you boost business during these slower seasons by giving customers a reason to shop. Companies may decide to give out more rewards during slow seasons and include an expiration date so that customers visit the store or website within a certain timeframe.

Reduce costs

Marketing to new customers and having sales staff reach out to them can take up a lot of time and money. This is especially true when you’re reaching out to new leads who may choose to shop elsewhere. When your brand focuses on creating a quality loyalty program, you can reduce the costs associated with finding new customers.

Loyalty helps you reach new customers

Loyal, satisfied customers are one of your most powerful marketing tools. In the age of eCommerce and online review websites, positive customer word-of-mouth is essential to attracting new customers. In fact, 83% of consumers place more trust in personal recommendations than any other form of marketing. A McKinsey study showed that referrals generate two times the sales of paid advertising.

We have always emphasized the importance of having a good website for your company because it can act as your best tool for marketing and sales. A poorly designed website can repulse people from your business and can cause you to lose customers before you even have them. Get in touch with HyperEffects to work on creating, enhancing, and making the website of your company more user-friendly.