How Loyalty Programs Increase Customer Retention

01/19/22 08:27 AM By Nazneen

Loyal customers are the sum and substance of a growing business, and they are an asset that every organization would not like to lose. But, have you ever wondered what it is that makes you buy from your favorite store again and again? It can be the service, product quality, the staff, or any other aspect that makes you feel valued. All these aspects are the building blocks of good customer experience. To enhance customer experience, businesses roll out customer loyalty programs.

Loyalty programs help you retain customers as well as win back lost customers. With a loyalty program, you establish an emotional connection with your customers. And when such a bond is established, customers have a 306% higher lifetime value. Studies also show that when customers are emotionally connected to a brand, 44% of customers are more likely to recommend it to their friends and families.

If we dive deep into how loyalty programs work, it revolves around one simple mantra- you simply award something to thank customers for choosing you over others. This is a distinctive way to build loyalty, no matter what the monetary value of the award is.

It would now make sense to you why airlines offer miles points because they want you to choose them repeatedly. Successful loyalty programs are advantageous for both customers and businesses as customers are satisfied with rewards and brands get additional recurring revenue.

Due to increasing competition, brands must offer something distinct that can help them have the edge over other competitors. Here, loyalty programs play a crucial role. When you offer rewards, discounts, or special offers through loyalty programs, you’re showing customers that they are important to you, and customers in return will come back to you, shop more, and become loyal customers.

Further, it is one of the effective ways to interact and engage with your customers. Ultimately, they go deep down the sales funnel and make repeated purchases. When brands offer rewards and special incentives, customers are more interested in being associated with them.

Nonetheless, it is pretty daunting for businesses to track the lifetime value of customers. But, one metric that companies can use is the revenue generated from repeat customers- around 20% more than new customers. Businesses can benefit a lot from loyalty programs as they earn more income and indulge in fewer costs to retain customers over new ones.

However, businesses need three things to kick start with a loyalty program,

-   A solid strategy to retain customers.
-   A plan on how a loyalty program will help them retain customers and choose the best type of loyalty program as per business needs. Check out our guide of different types of loyalty programs (interlinking).
-   A cutting-edge platform to help you achieve the above two.

And that’s when the OptCulture loyalty program steps in. It’s customizable, and real-time updates will give you a measurable, valuable return on sales and retention, you will real time also know how the program is benefiting you and it helps you stand out from the rest while offering the best to your customers.

This blog was originally written by Priya Dialani for OptCulture.