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Why Every Business Needs a Customer Loyalty Program

Return customers provide a lot of value to companies. You need nine new customers to reach the conversion rate of a single repeat one. Once a customer knows and loves your brand, you don’t have to spend the extra time and effort trying to win them over. You do, however, need to put in the effort to show them that you appreciate their loyalty and want to continue meeting their expectations time after time. They already like you – but you have to nurture the relationship to keep them coming back.

Customer loyalty programs are a great way to accomplish this. By incentivizing customers to return to you, instead of checking out competitors, both parties benefit.

What is a customer loyalty program?

At some point, you’ve probably carried a punch card in your wallet for your favorite coffee or ice cream shop. The premise is simple: after an appointed number of visits, you get something free or discounted. Instead of switching from one coffee shop to the next, you probably stuck with the place where you could earn free Joe, thus making the loyalty program effective. Many variations of customer loyalty programs exist but they all have the same theme: exclusive savings for people who come back time and again. Customer loyalty programs do not require much one-on-one interaction but are effective simply for existing (though the really strategic ones see the most success).

The evolution of customer loyalty programs

Since the rise of the smartphone, loyalty programs have evolved tremendously. Now you can enter a store and its coinciding app will show you special deals and help you earn customer points. The Starbucks mobile app is a digital loyalty program success story, with more than 10.4 million users who earn points towards a free menu item each time they buy through the app. Retailer CVS has long had a keychain tag that customers could scan for deals and now it’s complemented with a mobile app and wallet that does the same thing – and allows for online shopping.

It’s not just traditional retailers that are tapping into the mobile loyalty program trend. Well-established publications like Time and The New York Times provide exclusive content to paying subscribers and access to parts of their websites that are ordinarily hidden behind paywalls. Online gaming companies have also gotten into the game by offering strategy content to its players as a way to empower them in their games and to ultimately spend more.

Some apps even use push notifications to tell you what deals are happening and to provide special loyalty codes. By making customer loyalty programs mobile, the benefits are two-fold: consumers get real-time access to what they actually need, and brands are able to boost the likelihood of a sale at the exactly perfect time. This is done through geo-targeting a customer while they have the app running on their smartphone. When the customer walks into the store a brand can cross reference their past buying behavior at that store to offer something specific to them. Brands can also get details on the buying behaviors of their customer base and tailor the loyalty programs to meet those needs. Giving a customer what he or she has wanted in the past can help tremendously with future sales.

Implementing a customer loyalty program

Each business has to decide the best way to deliver loyalty rewards to buyers. The nature of the business really determines this. If your company sells expensive appliances, then having consumers earn rewards toward a free item may not really make sense. Instead, a strategic email marketing plan could be the best bet, offering exclusive consumer discounts for those who opt in. If you own that coffee shop that used to pass out punch cards, joining a loyal rewards app for customers to scan in the store could be a perfect upgrade.

Look at the brands you admire and see how they implement customer loyalty programs. Even if you don’t have the big budget to do exactly the same thing, you can develop a scaled-down version that works for your base. Remember to make what you offer useful for your consumers – and they’ll want to buy more.

How do you implement customer loyalty programs?

Written By

James Jones is a writer, who resides in New York City. Originally from Los Angeles, California, James’s career started after getting his BA from UCLA where he studied Sociology and Theater. After graduating, he started writing.

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