As the cost to acquire customers rises fast, it is becoming increasingly critical to retain the customers that do come our way. Customer loyalty programs are growing ever more popular because they have proven time and time again to be effective at driving repeat customers who advocate for your brand.
Research shows that increasing your company's customer retention rate by five percent increases your profit by up to 95 percent, which makes sense when you consider that loyal customers are ten times more valuable than one-time customers and it is five times more expensive to find a new customer than to retain an existing one.
That's why, as business owners, it is completely unsustainable to pour money into marketing without maximizing the value that each customer provides.
The Effectiveness of Loyalty Programs
Effective loyalty programs that stimulate engagement while providing relevant rewards nearly always earn businesses more money than they cost to implement.
But don't take my word for it, take a look at these research-backed facts that give clear insight into whether or not loyalty programs drive results.
Conclusive retail-consumer studies show that:
- 69% of consumers believe their choice of retailer is directly influenced by whether they can earn customer loyalty points.
- 58% of respondents make monthly purchases from stores and brands whose loyalty programs they belong to.
- 64% of retailers say their loyalty program is the best way to connect with consumers.
- 50% of consumers say they have changed their behaviour to reach a higher tier within a loyalty program.
- 83% of consumers agree that loyalty programs make them more likely to continue doing business with certain companies.
- 67% of customers say that surprise gifts are very important for loyalty programs.
- The average repeat customer spends 67% more in their 31st to 36th months of their relationship with a business than in the first 6 months.
- Loyal customers are ten times more valuable than one-time customers.
While many businesses can survive without loyalty programs, the question we ask is: why should you even try.
Loyalty programs cost very little to implement yet drive phenomenal results.
While we agree that nothing is more important to business success than building a trusted brand and providing a great experience, we also believe that an effective loyalty campaign can help you reach those objectives.
You deserve a solid return on your marketing investment, and your customers deserve to be rewarded for their loyalty.
The fact is, if you have an well-designed loyalty program, once you set it up it will drive continuous revenue—which is why we say without reservation: if you don't have an effective loyalty program, you are throwing away marketing dollars.
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