In today’s competitive business world, customer retention is everything. But don’t take our word for it: even the Harvard Business Review says it’s less expensive to retain existing customers than it is to go out and find new ones. If a business can find a way to retain customer loyalty, they will gain -- and keep -- a competitive advantage in the marketplace.
What’s a Rewards Program?
A rewards program incentivizes a customer to behave in a certain way. They motivate a customer to come back and make another purchase in order to receive the reward. For example, airlines have frequent flyer miles that consumers can redeem for trips. The incentive is for the customer to stay with one airline in order to add more flier miles.
If your rewards program has tiers, a customer may buy more of your products in order to reach the next level. Airlines often offer Silver, Gold and Platinum status, which allows frequent flyers to board early, get free drink tickets or other perks.
Data, Data, Who’s Got the Data
The other benefit of a rewards program is that it allows a business to track the shopping and purchasing behavior of their customers. The analytics lurking behind the scenes of any customer loyalty program capture important data that allows a business to track:
• What kind of promotional offers actually motivate a consumer to buy.
• Seasonal purchasing trends by individual consumer.
• Brand-specific purchasing patterns.
• Price-specific data.
• Household information such as whether they have a small child or pet.
All of this data allows businesses to personalize the shopping experience for consumers who are hungry for this kind of attention to detail. This personalization will allow you to retain customer loyalty by creating a shopping experience designed especially for that person.
What Businesses Use Loyalty Rewards Programs
Airlines, hotels, gas stations, grocery stores and even pet food stores all use rewards programs. Business Insider stated loyalty memberships in the U.S. between 2008 and 2012 increased in 10% increments annually, and the average home had 23 loyalty cards per household. Clearly these businesses are on to something; they know that these programs help retain customer loyalty across industries.
These loyalty rewards programs can also be applied in a B-to-B environment; for example, businesses can be incentivized to buy from certain wholesale suppliers.
Retain Customer Loyalty – Consider a Rewards Program
Designing a custom incentives program to match the specific goals of your business will take an industry expert with a track record of successfully managing customer relationships across a wide variety of industries. Incentive Solutions wants to be your trusted advisor; we understand what works in a rewards program and what should be left out. For a complimentary consultation to find out how a rewards program can help your business retain customer loyalty, contact us.