Loyalty schemes: are they really worth it?
Loyalty schemes are extremely popular; millions of us have them. You probably have a couple in your wallet right now. I for one have had the same Boots Advantage card for years, regularly use my Nectar card for petrol points and have the Auntie Anne’s UK Pretzel Pass app on my phone for free pretzels!
With the recent launch of myWaitrose it's clear to all that loyalty schemes are still considered by some marketers as a sure fire way to engage with customers, reward spenders and most importantly, retain custom.
It’s not difficult to argue the value of such schemes to customers - at the end of the day, we all like to save money or be rewarded with some freebies. However, where is the benefit to brands and businesses?
Data insight with digital loyalty schemes
Moving from the old-school paper loyalty card to a digitalised version provides businesses with great insight into the buying behaviour of all customers. This invaluable data can then be manipulated to create targeted and relevant marketing messages based on requirements and habits - not broadcasting a ‘one size fits all’ message.
Retain your customers
A loyal customer is priceless. 'By rewarding customers with exclusive offers and gifts, you are 60-70% more likely to sell to an existing customer compared to only 5-20% to a new customer' - Ecommerce Eye Candy, 'Customer Acquisition Vs. Retention Costs'. With such powerful stats, it appears to be a no-brainer - surely businesses and marketers alike should focus on creating a customer retention strategy to sit alongside wider plans? Loyalty schemes are a great tool to help ensure loyal customers remain exactly as they are, loyal .
Increase customer lifetime value
Over a period of time, loyalty schemes can help increase the lifetime value of customers. Not only is there a higher chance that customers will spend more with you in each transaction, but more importantly, spend more often. A study by Invesp found that existing customers are 50% more like to try new products compared to only 31% new customers. The stats say it all really!
Acquire new customers
Promoting a well thought out loyalty scheme can help to acquire new customers. If the hook is strong enough then there is no reason when integrating the scheme with wider marketing plans, the scheme can be an added pull. By using the data from a loyalty scheme, customer acquisition campaigns can be much more relevant and targeted, thus, increasing your chances of gaining new customers and keeping them. In fact, many businesses (70% to be precise) who actively push retention schemes agree that it is cheaper to retain a customer than acquire a new one.
The above essentially sums up my opinion of why more businesses and marketers need to adapt a retention strategy with loyalty schemes as central component. Having worked with a client who is currently pushing theirs and as customer who loves to be rewarded, it seems daft that more businesses aren't jumping on the bandwagon.
If you would like to discuss how your business could benefit from a loyalty scheme or how you could digitalise your current version, feel free to drop us a line!