The Importance of Measuring ROI in Loyalty Programs
Customer retention is a huge challenge for retailers, and all recognize the advantages of cultivating a base of customers: A 5% increase in customer loyalty can increase the average profit per customer by 25% to 100%, according to fitsmallbusiness.com.
Creating a customer experience that is satisfying is a much more cost-effective strategy than constant prospecting.
Short-term value of increasing sales vs building relationship
Some business assume that by simply rewarding customer with discounts, shoppers will become more loyal; JC Penney (the american stores chain) discovered tha unintended side effects of sale psychology too late.
However, cultivating a strong emotional bond between a brand and its customer is what makes it more likely that a customer will continue to visit the store or website in the future.
And the intangible aspects of relationship building come actually with a very clear ROI, if you’re tracing the right metrics.
For example, offering a sales discount as part of a birthday recognition personalizes the rewartds experience to every member, making each feel special and recognized for being a loyalty club member.
Yes, you’re making them feel special and a little more bonded emotionally to your brand.
And yes, you see immediate ROI on those relational tactics when they redeem their birthday offer.
Watching for and leading customers to the next phase in the journey toward a higher overall CLV should be the goal of every loyalty program, and can be accomplished more effectively with loyalty and personalized marketing tools for Retail Pro.
While well-run loyalty programs that deliver customer satisfaction clearly improve retention rates, anticipates and exceeds their needs as soon as they join.
Having a well-designed loyalty program not only keeps returning customers happy, but it also grows the retailer’s customer base.
Millennial mindshare: Experiential loyalty
Millennials are the largest group of shoppers in the current market, and as a demographic, they are very brand loyal.
However, they are particular about what they are looking for in a loyalty program.
No punch cards for this generation – or trading stamps.
The key to success with millennials is building a relationship, and that’s done through offering special experiences rather than coupons.
For example, a credit card that offers advance ticket purchasing for popular events; a coffee roastery that gives members a heads up to new roasts and coffee tastings or a makeup line that provides VIP access to a celebrity Q&A on a social network are ways to make a customer feel special and want to be part of a loyalty program.
Loyalty programs are important to retain customer and attract new shoppers, as well as to help retailers forge deeper, richer, customer connections.
Happy customers spread the word, and prospective customer generally trust friends’ feedback more than advertisements or other types of marketing.
Loyalty programs help polish a retailer’s image.
Humans want to feel special, and loyalty programs help retailer provide that experience.
By doing so, retailers reap the benefits of repeat customers while attacting new ones – and enhancing their brand’s reputation.
Implement an effective loyalty program
At Cosin Consulting, we believe in the power of loyalty programs to drive growth and retention. That’s why we recommend Intersolve, our premier partner for gift card and loyalty program solutions.
By integrating this tool into your strategy, you can realize a wide range of benefits beyond traditional rewards. With Intersolve, you can personalize the customer experience, drive engagement across digital and offline channels, and accurately measure the ROI of your loyalty initiatives. With Intersolve, you can build stronger relationships with your customers and turn them into fans of your brand.
Contact us and our team of experts will help you improve your retail metrics and create a fully connected environment for your points of sale through our retail consulting and customized omnichannel project management services.
