“These referrals typically convert at a rate that is 7 times higher than traditional paid advertising/marketing campaigns.”
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For example, a customer that has purchased from you ten (10) times, refers three times as many people than a first time customer. Loyal customers bring new customers to your business through referrals.
In even better news, these referrals typically convert at a rate that is 7 times higher than traditional paid advertising/marketing campaigns.
Another example of a loyalty rewards program that stands out from the competition is Starbucks. In fact, Starbucks Rewards is one of the most successful customer retention programs ever implemented. Customers that enroll in the program are provided with useful items such as free in-store refills, free birthday rewards, and exclusive pay by phone feature to name a few.
The Starbucks loyalty rewards program not only drives repeat sales, but it also increases the average order value. The downloadable application actually encourages customers to gain more rewards when they purchase a large size instead of a small or add a piece of pastry to their coffee order.
This has led to a higher level of spending per transaction. The Starbucks Rewards program is a key piece of marketing strategy that has helped boost the business to $19.16 billion in yearly revenue.
Speaking of downloadable applications, mobile is essential to the success of any loyalty rewards program. Nowadays, consumers are constantly using their phones and tablets. That means reward programs that do not have a mobile-based component are doomed to fail.
In fact, 57% of consumers prefer to engage with their online loyalty programs with their smartphones or tablets.
Amazon’s Prime Day event is a great example of the impact that a mobile capable customer loyalty rewards program has on a company’s bottom line. The Prime Day deals were only available to customers that were enrolled in the Amazon Prime program.
Throughout the Prime Day event, members that were enrolled in this loyalty program received recurring notifications on their mobile devices about members’ only deals. Furthermore, they could shop these deals directly on these devices.
Amazon Prime members receive benefits such as free shipping, and free access to stream music, and video content such as movies. As a result of the Prime Day event and these offers, 91% of Amazon Prime members renew for a second year, and 96% that renew for a second year renew for the third year.
Increasing customer retention helps boost profits simply because loyal customers already have trust in your brand and therefore are likely to spend more money. For example, increasing retention by just 5% through customer loyalty programs can boost revenue anywhere from 25% to 95%.
Another reason to implement a loyalty rewards program is due to the fact that the vast majority of consumers prefer a personalized experience.
For example, more than half of Generation K and Millennials state that personalization as a high priority. By encouraging your customers to fill out profiles as part of your loyalty program, you can get the data so you can not only personalize customer experience but also create targeted marketing campaigns, which of course will greatly increase your bond with customers.
A comprehensive, personalized loyalty program will make your customers feel like they have an emotional connection with your brand and will increase customer patience in case of mishaps.
Last but certainly not least, a comprehensive loyalty rewards program will actually save your business money. Although implementing a rewards program is an investment, customer retention programs are significantly less expensive than attracting new customers. For example, acquiring a new customer can be 25% more expensive than retaining an existing customer.
*Any references to past performance, regarding financial markets or otherwise, do not indicate or guarantee future results. Paymynt Financial is not engaged in rendering any tax, legal, or accounting advice. Please consult with a qualified professional for this type of advice.