Are you leveraging the true value of customer loyalty?

Think about it: Are you actually making the most of the 20% of your existing customers who could possibly drive 80% of your future revenue? Or are you still spending all your time chasing new leads at the expense of nurturing loyalty among those who already buy from you? With 65% of a company’s revenue coming from repeat business, coupled with the fact that it's up to 25 times more expensive to acquire a new customer than retain an existing one, using a loyalty programme has never been better for business.?

But what is the true cost of loyalty, and how can having a loyalty programme benefit your business revenue and ROI? Let’s find out:?

Maximising impact: The power of loyalty programmes

With 87% of UK respondents saying that a loyalty programme influences them to buy again from that business, the incentive is clear. Yet, at its core, a customer loyalty programme isn’t about impressing your customers with shiny bells and whistles or a dangling carrot. No, it’s about showcasing to your customers that you have a commitment to their success and satisfaction. More so, in this modern age of hyper-personalisation, where high customer expectations are continually developing, loyalty programs offer a dynamic platform for innovation and adaptability. Not only do they allow your business to test, learn and iterate on what works best for your customers, but they also allow you to stay agile, a factor which underpins your ability to remain relevant in these rapidly changing markets.?

But what else can it do? And how does it affect your bottom line? Let’s explore:

Retaining customers

Consider how much of your current budget goes to acquiring new customers. Then, ask yourself if it is actually giving you the ROI you expect or even need. If not, it’s a great reminder to realise that acquiring a new customer can be up to 25 times more expensive than retaining an existing one. Then it makes no logical sense to continually chase after new leads when you already have an audience who is ready, willing and able to buy from you.?

Loyalty programmes incentivise customers to continue doing business with the company to earn rewards or maintain their loyalty status. This helps reduce customer churn and keeps them coming back, providing a steady stream of revenue.

Increasing customer lifetime value

Consequently, retaining customers allows you a chance to boost your overall customer lifetime value (CLV), as loyal customers tend to spend more time with a company over time. By rewarding their loyalty, your businesses can encourage higher spending levels and extract more revenue from each customer relationship.?

But how does it work? The psychology behind it shows that human behaviour tends to seek habit formation and reward-seeking - two components of a well-planned loyalty programme. As such, customers not only increase their frequency of transactions, but the value of said transactions will likely rise over time as they continue to see your business as a partner rather than a supplier or provider.?

Streamlining customer acquisition

While the purpose of loyalty programs isn't to specifically act as "shiny objects" for customers, they are an attractive magnet for new customers. For instance, the possibility of joining a rewarding ecosystem makes the initial purchase decision that tiny bit easier to digest, turning what could have been a one-time transaction into the start of a long-term relationship. This is where you need to initiate a loyalty loop to turn that one-time purchaser into a truly loyal customer.

Enhancing cross-selling and upselling?

Cross-selling and upselling are seamless when you have a platform to personalise all types of customer experiences. Armed with your endless customer data, there isn't much you can't do to tailor these rewards, which ultimately aids in increasing the chances of higher-value sales further down the line.

But what does this look like in action? A great example is Avios, a currency made by British Airways Executive Club. By encouraging consistent use of the programme, British Airways ensures customers can access various premium perks like seat upgrades, flight upgrades, free air miles and much more. As such, it’s become the go to for many travellers and has created a prosperous ecosystem in which they can foster deep brand loyalty and relationships with their customers.?

Providing valuable customer data and insights

Think you have enough data? Think again! When thinking about loyalty programmes, you're only just getting started when gaining customer insights. By collecting data through your loyalty programme, you'll likely unearth a goldmine of predictive analytics for hyper-personalised marketing. This access allows you to not only react to market trends but be agile enough to anticipate them. This approach allows you to craft bespoke offers that meet your customers where they are now, ultimately helping to drive revenue growth through enhanced customer satisfaction.?

Be a Loyalty Company and Not a Company that has a Loyalty Program

Ultimately, the key is to design a loyalty programme that provides genuine value to customers while aligning with the business's overall strategy and profit model. Done well, it can be a powerful revenue driver.

We know all businesses are full of busy professionals, and finding the time, let alone the headspace, to partner with the right expert can seem daunting. Fortunately, we know a thing or two about building digital expertise in a way that empowers teams and accelerates your route to market. Our services have been helping businesses drive demonstrable ROI via digital transformations for almost 20 years.

Need help nailing your loyalty and retention? Discover the power of using AI to personalise your user journey! Join us on Wednesday, 26 June, as we bring together product and marketing leaders to learn how to unlock the full value of your data assets and implement AI to personalise your user journey.