15 Feb Growing your business with loyalty programs
Loyalty programs offer your customers a wide range of benefits while simultaneously allowing you to build a closer connection with your customers.
Over time, your customers will appreciate the rewards they receive from your loyalty program. As they continue to do business with you, your brand can become the top of these consumers’ consideration sets. In the long term, these customers have a greater lifetime value that exceeds customer lifetime value without any loyalty program in place. Typically, businesses that have some sort of loyalty program are more profitable than those with out.
According to Ackroo, 78% of cardholders use loyalty cards every time they shop. So over 3 in every 4 customers that visit your business could benefit from a loyalty program.
Consider your favorite coffee place for example. Let’s say that every time you buy 5 coffees, your 6th coffee is free. It’s likely that this offer would prevent you from spending your money anywhere else and you might end up catching yourself buying more coffee than normal.
Some better examples of loyalty programs include reward dollars, threshold-based loyalty, special & time-based offers.
Reward dollars are great for customers who shop frequently at your location. As they spend money with their loyalty card, they receive a percentage of their total spending back on their card. Customers can then use those reward dollars for future purchases.
Nester’s Market, the grocery chain has this type of program in place. As a frequent shopper, there’s nothing better than realizing you’re able to pay off your groceries for the week when you get to the checkout.
Threshold-based loyalty gives customers’ spending goals where they can collect rewards once they have earned enough points or dollars on their card. These goals are pre-determined by your company.
A good example would be air miles with Aeroplan. Once an Aeroplan customer earns enough points, they are able to redeem these points towards their flights with Air Canada. At times these savings can be significant or even earn you a free flight.
Special and time-based offers are loyalty incentives where your business would offer its customers a special promotion that only loyalty program customers can enjoy.
Best Buy offers events, has limited time offers, and special discounts for its Reward Zone members. Only Reward Zone members can enjoy these special discounts and events. On occasion, their promotions for Reward Zone members can be similar to Boxing Day deals that would normally only happen once a year. Reward Zone customers appreciate this customer service and it’s proven to be a very successful initiative for the brand.
In addition to spending more than an average customer by being a part of your loyalty program, these loyal customers are more likely to promote your business through word of mouth.
At Kubera, we believe strongly in loyalty card programs. We are proud of the benefits and success that our merchants have achieved so far. From our experience, there’s no question that loyalty programs are one of the best ways for businesses to build closer ties with their best customers.