do loyalty programs really work

Do Loyalty Programs Really Work?

If you’re running a small business (or a large one), then you’ll need a means of attracting customers back on a regular basis. For all but a few businesses, most custom is going to come from a minority of customers, and keeping those high-value customers onside is vital.

Loyalty programs provide a means of doing precisely this. They’ll allow you to incentivise repeat purchases, promote a feeling of familiarity and closeness, and generally make your most valuable customers more likely to shop with you, and recommend you to friends.

So how exactly do they achieve all of this? Let’s take a closer look at the inner workings of a loyalty program.

What is a customer loyalty program?

Loyalty programs are collections of marketing tools leveraged by retailers, in order to motivate customer retention. They do this by offering rewards for repeat purchases, and for certain other behaviours, like follows on social media. Most of the time, retailers are rewarding these behaviours by offering discounts and free products.

Loyalty programs have the advantage of providing you with data on your most loyal customers, which can help you to focus your marketing efforts on the people who really matter. This in turn helps those customers to feel wanted and valued.

Do I need one?

If you’re an online retailer, the chances are good that you could benefit from a loyalty program. The overall online marketplace is growing 13% every year. Traditional forms of digital ads, like the banners you might see on a major website, tend to be viewed for a matter of mere seconds. In other words, they often don’t provide a return on what might be a considerable investment.

Loyalty programs tend to be especially effective among customers who’ve displayed a niche interest. They’ll allow you to bypass a general audience and target those customers who are highly likely to want to buy from you.

Looking into success stories

Organifi is a nutrient-supplement producer, specialising in plant-based superfood blends. Before implementing a loyalty scheme, it was enjoying large volumes of traffic to its website. But few of those visitors were spending.

By making a few tweaks – like awarding points for followers on Facebook and Instagram – the company was able to grab ten thousand new followers, and increase customer spending by 85%.

A similar success story can be seen in Lively, which is a premium underwear brand. The business had succeeded in developing a strong brand identity, but lacked the sense of community associated with a loyalty program.

It was able to achieve stellar improvements in several key metrics, including customer lifetime value, repeat purchases, and average order value. All of this has set the business up for success in the future.

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