1) You keep your customersCustomer retention is, of course, going to be the major goal of any loyalty program or customer reward system you put in place. By rewarding your clients for the desired behaviour – i.e. buying from you, buying in bulk or developing a buying habit – you give them a good reason to do so again in the future. A huge number of studies have been run on the effectiveness of loyalty schemes. The numbers seem to show that loyalty program members buy anywhere from 5-20% more often than non-members do in most industries. When it comes to what customer retention really means to your business’s bottom line are incredible when you put them into context: Even a customer retention boost of 5% can increase profits by 25%. There’s a reason why it’s a good idea to check out a network’s customer loyalty scheme plans when buying a franchise or to institute your own as soon as possible as a solo entrepreneur.
2) You gather relevant dataOne of the major advantages of customer loyalty programs is that they allow you to collect valuable quantities of data on your customers and their buying habits and trends. You can then utilise this data to tailor your sales efforts to specific groups of customers – or even specific individual customers. Wide-scale analysis of this kind of data can also help you succeed in a wide range of tasks:
- Planning marketing campaigns
- Deciding which marketing channels to use
- Inventory management
- Making growth and expansion plans