Measuring the Value of Customer Loyalty

OlufisayoOctober 27, 202011,291 views

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Customer loyalty is something all businesses should strive for. While attracting new customers is important, did you know your existing customers could be the most profitable for the business?

Here, we’ll look at the value customer loyalty delivers to businesses. You’ll also learn how to create your own loyalty programme.

What is a loyalty programme?

A loyalty programme rewards existing customers every time they shop with you. There are different types of loyalty programmes you can utilise, and each has its own unique benefits.

Did you know that an effective eCommerce loyalty programme greatly boosts sales? Statistics show that boosting customer loyalty by just 5% can increase profits by over 95%. That’s an impressive figure!

Typically, a loyalty programme gives existing customers unique perks. It could be they collect points when they shop, which can then be transferred to cash, money off or free products. It’s worth researching the different types before you decide which one is right for your business.

The driving principles of customer loyalty

There are a number of driving principles behind customer loyalty. In a recent study, it was revealed that the main drivers for brand loyalty include:

Trust
Exclusivity
Personalised interactions
Enjoyable customer experience

Trust is especially important when it comes to establishing loyalty. Customers need to know they can trust the business to deliver a quality service.

Exclusivity is another important factor. The loyalty programmes that perform the best are those which offer a degree of exclusivity. That is, the customer receives something unique for being a part of the loyalty programme that they wouldn’t otherwise get.

In order to build trust and entice customers into your loyalty programme, sending personalised interactions is important. At the very least, this means addressing each customer by name. However, you could also go further and send personalised deals related to the customer’s buying habits. These are just some of the basic principles of customer loyalty.

When a loyalty programme could damage your brand

While loyalty programmes can deliver a lot of benefits to businesses, they can also have a damaging effect. In order to reap the benefits, you need to ensure you are offering the best loyalty programme to your customers.

If the programme doesn’t include features, experiences and benefits that your customers expect, it can lead to negative feedback. This in turn would damage your brand.

So, it’s important to take time and put together a programme that you know your customers will love. You could even ask them what they would like to see included in a loyalty programme before you develop it.

Overall, having a loyalty programme in place can do wonders for customer retention. Just ensure you research what makes a good programme and the mistakes to avoid when creating one.

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