Tony O'Connor, Loyalty Expert
Tony O'Connor Loyalty Expert
 Loyalty program benefits • 6 minute Read • 11 May 2021

8 Important Benefits of a Loyalty Program

Loyalty programs offer a range of benefits, including customer retention, data collection and more effective marketing.

A brief history of loyalty programs...

Believe it or not, loyalty programs are actually a pretty new invention. Sure, there were some early attempts in the 1700s and and 1800s - but it wasn’t until the 1980s when America Airlines utilised their customer database to create the world’s first version of Air Miles.

Since then, other airlines, supermarkets, coffee chains and virtually every other industry has followed suit. Sometimes with a simple stamp cards that offered a free gift after a set number of purchases. Or perhaps with a plastic card, which helps companies collect more meaningful data. 

What really revolutionised the loyalty industry, was the smart phone. Suddenly customers didn’t need to carry around so many cards, that they rarely used. Suddenly, everything could be scanned, recorded and activated with an app.

In the digital age, loyalty programs are easier to set-up and more valuable than ever before. Here are just a few of the benefits…

 

Loyalty Program Benefit #1 - Increased sales

This is the most obvious benefit, so we’ve made it number one - however it might surprise you to learn that loyalty programs can increase sales in a number of different ways.

First of all, successful loyalty programs encourage repeat purchases and create repeat customers. By definition, these repeat customers come back to your business again and again, and therefore buy more of whatever it is you're selling.

 

Loyalty Program Benefit #2 - Increased average cart value

Another pleasant side-effect of creating repeat customers is that not only do they return more often, but when they do, they tend to spend more than casual customers. This is because they trust your business to provide a certain level of quality or value.

They know what to expect, and they prefer shopping with you, so purchases that might make them hesitate in other store, tend to go straight into the cart.

 

Loyalty Program Benefit #3 - Decreased customer acquisition costs

Attracting new customers to your business is expensive. Whether you’re using targeted digital campaigns, or traditional media like TV and radio, the costs will soon add up. 

The real beauty of a loyalty program, is that you are retaining more of your existing customers, so you don’t need to invest as much in acquisition to meet your financial objectives.

 

Loyalty Program Benefit #4 - Increased advocacy

As any business owner or marketing manager knows, word-of-mouth advertising is the most powerful, valuable form of advertising for any company.

That being said, it can also be a double-edged sword. If your customer base is unhappy, they might also be saying negative things about your business to their nearest and dearest.

The key here, is that loyalty programs help to increase positive feelings by building trust - and in doing so the program can help transform your customers into brand advocates, who proactively tell their friends and family what a great job you're doing.

 

Loyalty Program Benefit #5 - Increased LifeTime Value

Another valuable loyalty program benefit is an increase in customer LifeTime Value. This simple metric can sometimes be the difference between a thriving company and a struggling company.

Essentially, every customer has a life-time value. If they make a single purchase, then it wont be very high. However if they become a loyal customer and return and again and again, over the period of a number of years then their LifeTime Value is going to be worth a huge amount to your business. 

And that’s just looking at the monetary amount they spend, without including all of the other benefits that loyal customers bring. 

 

Loyalty Program Benefit #6 - Increased Customer Data

When run correctly, digital loyalty programs generate huge amounts of usable customer data. At the very least you’ll be able to see who your most valuable customers are - however with a little more digging, you can also see which products your best customers prefer, when they shop, and what combinations of products they tend to purchase.

There are also different demographics you can get access to, which can also help enormously with marketing and building your brand.

 

Loyalty Program Benefit #7 - Increased personalisation and targeting

One of the consequences of better data is the ability to tailor offers specifically to certain groups of customers you know are more likely to respond positively.

For example, if you’ve got an excess of a certain type of stock, you can use your customer database to see who likes and buys this product - then send this group personalised deals, that are not only more likely to increase sales, but also build brand affinity by demonstrating that you understand your customers.

 

Loyalty Program Benefit #8 - Automatic marketing

With a robust customer database, you can also set up a huge array of automatic marketing actions that are triggered by a certain action. Some examples include:

  • A birthday program, where customers receive a warm greeting, and possibly a special offer to celebrate their big day.
  • A request for them to leave a review after their 4th or 5th visit. As these customers have already shown that they like your business, they are far more likely to leave a glowing review.
  • A message that is triggered if they don’t make any purchases over a specified time limit. This is an excellent way to reduce churn, by welcoming at-risk customers back to the store with a personal message and possibly even a sales incentive.

Once created, all of these triggered emails will be sent automatically, helping to boost your business, and saving you time.

 

Launch your own Loyalty Program by joining a Loyalty Platform

While the benefits are enticing, some companies are reluctant to look at launching a program that could cost a lot of time and money to implement, while not providing tangible benefits immediately.

The good news is that there are already loyalty platforms available that are plug-and-play - and can start showing results immediately.

Some of the best, even provide a loyalty network, where customers can collect points and earn rewards at thousands of other companies too - meaning they only require a single card, or a single app, in order to build loyalty.

To discover more about how Piggy does this, get in touch with our loyalty experts by clicking here

 

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