Everyone likes a little reward: How a loyalty program could help your business thrive

There are many ways to drive up sales and create a thriving business. Having a unique idea, tapping into an underrepresented demographic, or offering favourable terms that your competitors can’t beat are all great ways for attracting new customers. Yet the key to any long-term business plan is identifying opportunities in order to retain clients and diversify your customer base. One of the best ways to achieve that is to introduce a loyalty program, that offers rewards based on repeated purchases.

Loyalty programmes are very popular with clients

Although there are many different types of bonus programmes that reward customers, such as welcome bonuses and referral rewards across various industries, the basic concept of loyalty programmes is quite straightforward: a client is rewarded after buying your product or using your services several times by getting offered something for free. This is usually either the same product that the client is already familiar with or a different product from the same company – and both of these two options have their perks for your business. Offering the client the chance to sample something else on your menu not only makes them feel happy and rewarded for being loyal to your brand, but it also gives you the added benefit of converting them: they might like the new product or service they got a taste of so much that they become regulars on that front, too. Furthermore, they could become brand ambassadors for you, introducing their friends and family to your services.

UK consumers, in particular, are very familiar with loyalty programmes – most of the big supermarkets and the little cafes we visit daily have their own dedicated programme. In fact, a 2017 survey across clients in the fast moving consumer goods (FMCG) industry in the UK revealed that most of us are already members of such a programme. 55% of respondents stated that they are members of loyalty programmes across multiple retailers and a further 28% are members at just one retailer. Only 17% claimed no membership to any programme. This means that setting up one of your own won’t involve the pain of explaining to your customers what it is and how it works to great lengths. Depending on the industry you are in, you could offer it in a form that would be more appealing to your customers: fun visuals or game-like elements sometimes can go the extra mile and make clients excited they joined.

This kind of offer isn’t limited to any one industry, either. For example, businesses in the entertainment industry have embraced the concept of welcome and loyalty bonuses in order to provide a discount on their services to potential customers. Music-streaming service Spotify regularly updates its ongoing offers, as well as providing a month-long free trial for those who have never had an account before. Away from entertainment, though, those in the financial sector have taken these aspects on board, too. Many forex brokers will offer different bonuses based on a trader’s length of time trading through them, including welcome bonuses based on the amount deposited or winning and losing bonuses.

Having a loyalty system in place is one of the biggest trends today and it could go a long way towards client satisfaction and retention. As always, numbers don’t lie: according to MarketingLand, 64% of businesses saw membership in loyalty programmes increase during the last year, while the systems in place are getting more elaborate and contribute towards more efficient marketing. Research has shown that almost 80% of clients are extremely content when loyalty programmes offer a high degree of personalisation, while making them feel special results in 2.7 times happier customers. Millenials are also a driving force in loyalty trends: while 62% of all respondents would be happy to pay a fee in order to have access to a rewards system at their favourite brand, this figure rises to 75% for those aged 18-24 and to 77% for clients aged 25-34.

Setting up a rewards system could work wonders towards generating profit

It is not just customers who are happy to get the occasional “on the house” cup of coffee. Getting a rewards system can have tremendous benefits for your company and sales. Why? Simply because client retention is so much more rewarding and less costly than converting new clients. In fact, it can be 6 to 7 times more expensive to acquire a new client than keep an existing one. It is also much easier to sell your products and services to someone who has already trusted you before: while the odds that you can sell a product to an existing customer are roughly 60%-70% – the same figure drops to 5%-20% for new clients. And returning clients also mean more money for you: they spend on average 67% more than a prospective client. Yet, loyalty programmes are also good for attracting new clients: more than 82% of consumers are more likely to shop at stores that have loyalty programmes.

Another perk of this type of marketing is that it seems to work well across industries: hair salons, for example, saw their sales rise by 30% after introducing a loyalty programme to reward regulars. Whatever the sector you are active in, you can pick and choose from various types of reward systems the one that is perfect for your business and your customer base. It could be a simple and straightforward points system, where clients accumulate points for every pound spent so that they can then use them for discounts or as money to purchase other products from your brand. You could also introduce loyalty memberships: charge your clients a small annual fee for perks and promotions. Or even better, introduce a basic free account and allow them to upgrade if they want to receive more rewards. This gives customers more flexibility, while it also lets you earn from their tendency to remain brand-loyal when they have a dedicated account.

With clients who are familiar with this system and more than willing to participate, it really does seem that loyalty programmes are a win-win situation for all of the parties involved. Waste no time and get informed about how to start one today.