What value does a loyalty program create? Is the loyalty program supposed to encourage or build barriers to leaving?

Is the loyalty program supposed to encourage or build barriers to leaving?

Customer databases are one of any organjization's most critical assets, affecting the business's profitability. Most companies need help optimizing customer acquisition costs, and the profit from the first transactions cannot cover them. That is why it is essential to prepare an appropriate retention strategy that motivates customers to make subsequent purchases and use the services or products of a given company for longer.

In the B2B sector, the decision maker is usually not the end user, while in the B2C segment, the decision maker is typically the end-user or co-user. That is why it is so important to define who we are talking to and the real motivations of a given person to use our offer. A commonly used tool is the so-called loyalty programs, which reward users for purchases in their simplest form.- Most of these programs are introduced with a clear plan, and the mechanisms used do not improve the frequency of purchases or contribute to building brand loyalty. The program should be designed in such a way that it reaches active customers with potential and gives them real rewards. In addition, it should create exit barriers so that the customer is aware that by resigning from the offer, he loses the privileges he has acquired for a long time.?

A loyalty Program is a powerful marketing tool that brings measurable benefits by improving retention. The cost of acquiring a customer is often independent of the company, while a well-calculated loyalty program is fully calculable and can bring significant profits. It is vital that the entire sales and marketing organization is aware of its existence and goals and that it becomes the leading platform for communication with customers. Only 100% focus of the organization and a dedicated team will be able to build a competitive advantage and deliver real value to customers.

Before you start designing a loyalty program in your company.

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1.???Remember that the loyalty program aims to avoid convincing customers of your introductory offer. It should be designed to get the most active customers to act, not the hesitant ones. The loyalty program cannot replace a provider or be an end in itself. We often spend the marketing budget on rewarding people who only occasionally use our products without knowing the additional benefits.

2.???Reward frequency - first purchases are not loyalty. According to the Pareto rule, about 20 % of customers will be the most loyal group and take the most care of them. Apply progression - the more you use the offer, the more you get in return.

3.???Use your most loyal customers to recommend your company - most satisfied people give positive recommendations. Create the right tool so that they feel like real brand ambassadors and are appropriately rewarded.

4.???Introduce gamification - people are more willing to engage in competition and challenges. Give them a chance to prove themselves and discover new products and special offers along with the implementation of tasks.

5.???Use the opportunity to collect points over a more extended period. Introduce quarterly slots for special events, e.g. holiday races or winter downhill, where customers can get additional prizes.

6.???Also, use the collected data on customer purchases. A loyalty program is the best consumer database. Use it to propose dedicated offers that may be most interesting to the customer during their lifecycle.

7.???Everyone wants to feel special; it can be about something other than another discount or prize. _ Give your best customers a sense of uniqueness by offering, e.g. limited pre-sales, short series just for them or invitations to meet the creators of their favourite products.

8.???Also, show others how much your most loyal customers get. True stories always confirm that the program's offer works and is within reach of every user.

9.???Build exit barriers – the mechanisms of the offered loyalty programs should be constructed so that it is not profitable for the customer to leave the supplier. Using temporary and progressive reward mechanisms should convince the client that going for another company does not pay off.

Remember who your recipient is. In the case of B2C projects, they are widespread and more dedicated to limited groups. On the other hand, in B2B, it should be noted that the so-called Decision Maker and the rewards were targeted at individuals, not companies.