Did you know that on average U.S. consumers belong to 16 loyalty programs but actively use less than half of them? However, it costs five times as much to attract one new customer than it does to keep an existing one. So, are customer loyalty programs worth the investment? Keep reading to learn more about different types of customer loyalty programs and the range of key benefits they offer both businesses and customers.
Types of Customer Loyalty Programs
Customer loyalty programs vary, and the type of program that a business chooses will depend on its goals and target audience. They will also need to determine what will be the most effective in driving customer loyalty and retention. Here are some common types of customer loyalty programs:
- Points-based loyalty programs: The most common type of loyalty program, they work by rewarding customers with points for each purchase they make. Customers can then redeem these points for discounts, free products, or other rewards.
- Tier-based loyalty programs: Each tier offers increasingly valuable rewards as customers reach higher levels of loyalty.
- Cashback loyalty programs: Offer customers a percentage of their purchases back in the form of cash or store credit.
- Membership loyalty programs: These require customers to pay a fee to join, but in return, they receive exclusive discounts and rewards.
- Referral loyalty programs: Rewards customers for referring friends and family to the business.
- Social media loyalty programs: Use social media platforms to engage with customers and reward them for their loyalty.
- Collaborative loyalty programs: Involve partnerships between multiple businesses, allowing customers to earn and redeem rewards across multiple brands.
The Benefits of Customer Loyalty Programs
Once a company has chosen one or more loyalty programs to implement, how quickly will they see the benefit? Unfortunately, this type of investment may not yield results for months, even years, for some customers. But the longer a customer is engaged, the more likely they are to come back and spend. Here are some of the benefits a business can look forward to:
- Increased customer retention: Customers are more likely to continue doing business with a company if they feel they are being rewarded for their loyalty. 77% of consumers say they are likely to stay with a brand that has a loyalty program
- Increased customer lifetime value: Loyalty programs help businesses increase the lifetime value of their customers. Customers who participate in loyalty programs tend to spend more with the business over time.
- Improved customer satisfaction: Customers like to feel that a company values their business. This can lead to increased customer loyalty and positive word-of-mouth advertising. 70% of consumers are more likely to recommend a brand with a good loyalty program.
- Increased brand awareness: Loyalty programs can help businesses increase brand awareness by encouraging customers to engage with the brand and share their experiences with others.
- Improved customer data: Gather valuable data about customers, including purchasing habits and preferences. This can help businesses tailor their marketing efforts and improve the overall customer experience. In fact, 87% of customer loyalty members are interested in having details of their activity and behavior monitored in order to receive access to personalized rewards or engagement.
Streamline the Process with Rockton Pricing Management
Ultimately, it’s up to you to decide whether a loyalty program is worth the investment for your company. So, what’s holding you back? Is it overwhelming wondering how you will keep track of all those rebates, commissions, offsets, or other potentially complicated adjustments? Introducing: Rockton Pricing Management (RPM)! It’s the most flexible, powerful, multi-platform pricing solution available. RPM can automate even the most complex and obscure pricing scenarios and calculations. Reach out today if you’re interested in a demo or free trial!