Loyalty programs are one of the oldest ways to influence customers into sticking with business. These programs date back to when a little card would be hole-punched by a clerk, like at old school ice cream shops: “buy 10 cones, get 1 free!”
However, loyalty programs changed as technology has changed. So how do they benefit a company in today’s market?
First and foremost, they help sales by rewarding purchase. But beyond just that, they establish a connection between the company and its customers. Loyalty programs increase both overall revenue, by roughly 5-10%, and the frequency of purchases of program members according to Annex Cloud customer loyalty statistics.
Loyalty programs also collect valuable customer data when consumers sign up. This lets a retailer or brand understand who their loyal base is and how to reach them effectively. Companies can tailor their marketing efforts to this captive, loyal audience.
New technology has influenced what loyalty programs look like and how they interact with consumers. Chipotle recently started a program using a money-transferring app called Venmo to bolster its program. In this contest, select winners are sent between $1-$500 in exchange for providing their phone number and signing up for their loyalty program. This bold tactic has garnered a lot of attention – to be determined if it’s ultimately successful.
The bottom line is that loyalty programs continue to work. Customers feel appreciated when they get rewarded for consistently making purchases – building loyalty and purchase frequency. While it seems like almost every brand and store has one, and they all look fairly similar, the positives far outweigh the negatives. As long as they continue to adapt and offer relevant incentives, loyalty programs will be a winning strategy for the foreseeable future.
If you’re looking to create new and exciting ways to connect with your audience, call us we’d be glad to show you how.