The rewards of customer loyalty
Loyalty programs are a rewarding initiative. As part of a good experience, customers are rewarded for their patronage; a motivating reason to make repeat purchases. And for businesses, the rewards are greater. Encouraging return visits, repeated and additional purchases, from current customers is significantly more economical than sourcing new customers. Franchise and dealer networks can bring a local element to the mix. Providing customers with an offering that encourages loyalty, either across the network or at individual locations, can be a big advantage. Instead of searching, seeking, and convincing a customer to purchase from your retail banner, your current customers are looking for their next opportunity to visit you.
Connect, motivate, and activate.
Loyalty programs really do come in all shapes and sizes. Motivating your customers can be a great time to flex those creative muscles. As a general overview, the incentives typically fall into a few categories: rewards that can be redeemed at a relevant brand or retailer; an opportunity to contribute to a charity or community initiative; or an exclusive offer or discount on your own products or services.
Franchisees add a local dimension to loyalty.
Franchise networks can add another dynamic to their loyalty program – local relevance. The retail landscape and consumer preferences can vary from city to city and town to town. Knowing what brands and retailers your customers like will enhance the value of a reward. Similarly, the ease of redemption is a key factor in the perception of value. For example, running a promotion that encourages purchases of $50 or more with a $10 Gift Card at a nearby restaurant can be a motivating proposition. But, which one do you choose? A particular restaurant may cater to a similar demographic; but, it may have a very poor impression locally. This is where you can add value by knowing your customers and your market.
Smaller centres are, naturally, going to be served by a smaller selection of retailers. A franchise can leverage this by incenting their customers with rewards like Gift Cards for retailers that can be conveniently redeemed. Plus, the opportunity to cross-promote with another local business or franchisee can become a fruitful symbiotic relationship.
A stronger database means stronger customer retention.
Another great benefit of a loyalty program is data collection. According to a study done in the U.S. by Loyalty360, 67% of people were willing to provide their personal information in exchange for a reward. That’s important. Having a solid database of customer contacts can make a major impact on your marketing efforts. It gives you the advantage of communications efficiency.
More efficient, more profitable.
The efficiency of generating sales through repeat purchases is, perhaps, the most appealing aspect of a loyalty program. This stat provided by OutboundEngine hammers this point home: Increasing customer retention by 5% can increase profit from 25% to 95%. Regardless of your budgets and price points, that equates to a significant ROI. And, according to Forbes, a loyalty program increases “customer lifetime value by 30%”.
Loyalty programs really are about building relationships. Learning about your customers – perhaps by offering an incentive - and knowing what they like can help you make a big impact quickly. And, by fostering and nurturing those relationships with rewards, the opportunity for a long-term relationship increases tremendously.