Importance of Customer Loyalty Programs

In today’s hyper-competitive business markets, building and maintaining customer loyalty has become more critical than ever before. Customer loyalty is created and built over time through positive experiences with a brand or business. But in today’s high-tech world, another effective way to establish customer loyalty is through loyalty programs on digital platforms that aim to incentivise consumers into their continued patronage.

Why is customer loyalty so important to businesses?

Businesses emphasise customer loyalty as they tend to be more profitable for the following reasons:

1. Revenue growth
   According to various research, existing customers tend to spend more, and it is easier to encourage them to try and buy new products.
   
   
2. Cost Savings
   It will cost less for a business to market its products to an existing customer base than to attract new customers.
   
   
3. Improve customer retention
   A loyal customer base is also less likely to be swayed by a competitor brand, which translates to businesses retaining the industry’s market share.
   
   
4. Customer’s voices
   In addition, loyal customers give businesses a more effective source of valuable feedback and insight. This allows brands to improve their products and services, thus allowing them to stay ahead of the curve to meet the needs of their targeted consumer market.

How to build customer loyalty?

Loyalty programs are essential for businesses as they effectively encourage repeat purchases. With customer loyalty being a core component for many companies, most have turned to establishing loyalty programs. These loyalty programs come in various models—from receiving a gift upon a set amount of spending, to collecting points for redemptions.

What is the importance of loyalty programs?

A well-implemented loyalty program helps businesses successfully retain customers, as a long-term relationship is established through the offerings of rewards and incentives. But the loyalty program must be well-implemented and easy for customers to use to avoid negative feedback. Today, many loyalty programs are implemented via mobile applications that take a few minutes to set up and are automated for customers’ convenience.

Loyalty programs are also beneficial in helping a business stand out against its competitors as it does not compromise on its product pricing points. For example, in Singapore, an international casual dining business, Nando’s, offers a loyalty program based on collecting Chillies and promises guaranteed returns as customers can receive free chicken after every 3rd, 6th and 9th Chilli. The brand has also kept its minimum spending of SG$15 for collecting points relatively affordable and increases the number of chickens they will receive with every stage of their point collection journey.

Nando’s loyalty program is also being implemented in different countries and has met with great success, with the brand receiving the Best Loyalty Program 2020 in Australia. Why is Nando’s loyalty program a success globally? It is because the brand has ensured that the rewards are easily attainable, quickly.

Loyalty programs are also crucial in drawing in new customers. If a current customer base is happy with a brand’s existing loyalty program, they are highly likely to recommend it to their family and friends. This will benefit the business in its drive for new customer acquisition and growth.

Businesses should consider investing in their customer loyalty programs and ensuring that it takes off in the right way to ensure a seamless consumer process. Loyalty programs should also be well-thought-out to allow the business to stand out among its competitors. This will help develop a long-term relationship with the business’s target market.

Learn more about how customer loyalty programs have helped other businesses by clicking this link.
To establish your own business’ loyalty program, contact our team today!