Why use Loyalty Programs?
Managing a profitable business in this day and age requires smart spending of your marketing budget. A well-planned and executed marketing strategy can represent the difference between a flourishing business and bankruptcy. One of the most effective and inexpensive sales tools available to businesses today is a loyalty program. When loyalty programs are well designed and implemented, they can provide many benefits including increased profitability.
The foundation for any loyalty program consists of five key activities:
This cycle delivers the following six important benefits to your business:
1. Loyalty Programs provide insight into your customers and their spending habits– Although businesses interact with customers on a daily basis, they often do not have important customer data such as demographics, information on who their most loyal and profitable customers are, and their customer spending patterns. A well-developed loyalty program allows businesses to access all of this data, which in turn allows stores to tailor products, services, and promotions that can lead to increased profitability and higher lifetime customer value.
2. Loyalty Programs allow you to reward your more loyal and valued customers – Loyal customers are the lifeblood of any business; they not only account for a significant percent of your total sales, but they also spread your brand by evangelizing their friends and acquaintances. Given their importance, it is key that a store be able to identify and also reward them. Good loyalty programs such as Loxal allow you to do exactly this: develop loyal customers and ensure they remain faithful to your store for many years to come.
3. Loyalty Programs increase customer visits and spending – A well-designed loyalty program motivates customers to return to your store more frequently and increase their spending. In fact, a recent study by the Carlson Marketing Group demonstrates that customer behavior is significantly postively impacted when that customer begins participating in a loyalty program. More often than not, a store’s loyalty program (and its respective rewards) is a key differentiator when a customer chooses to go to your store instead of a competitor.
4. Loyalty Programs build awareness, brand equity, and customer appreciation – Your store’s brand is one of your most important assets; a Loyalty program will help you enhance it. As word of mouth marketing becomes more and more prevalent, a loyalty program can help you build awareness around your brand and increase customer appreciation and satisfaction. When customers are able to redeem rewards at your store, they will be much more likely to share those positive experiences with their friends and family, therefore increasing your stores awareness and brand.
5. Loyalty Programs allow you to track the ROI of your marketing expenses – Measuring the ROI of marketing expenses has always been a difficult and daunting task. Well-designed loyalty programs allow you to track your marketing expenses and match them with actual results. This means more transparency and better decision-making on your part.
6. Loyalty Programs allow businesses to establish a dialogue with customers – Reaching your potential customers through print advertising, direct advertising, and other marketing methods can be very expensive and not very effective. Loyalty programs like Loxal provide the perfect platform for you to not only to communicate with clients, but also listen to them. Best of all, Loxal allows you to selectively target customers with customized (and free) messages.
Below is a comparison of Loyalty Programs with other marketing tools:
Conclusion: Unfortunately, limited resources and expertise have made it very difficult for small and medium merchants to implement good loyalty programs that yield the benefits discussed above. In fact, Loyalty Programs have been limited to large, national companies, which are increasingly eroding the uniqueness of our local economies. That’s where Loxal can help. Our free and simple loyalty program can be created in minutes and needs no investment or work on your part. With Loxal you get the benefits of a loyalty program without the unnecessary hassles!