Many businesses say their biggest challenge is to improve their customer retention rate. As per one new data, the average business loses nearly 15 to 30 percent of its customers every year owing to a lack of customer loyalty. In some businesses, less than 20 percent of their customers make a second purchase.
However, robust loyalty program management and personalized loyalty programs are the best solutions to the problem. An increase of one percent in customer retention can enhance revenue by five to ten percent.
At LoyaltyXpert, a reputable loyalty solution in India, we have assisted several businesses in reinforcing their loyalty programs. In this blog post, we discuss seven strategies that businesses can use to boost their personalized loyalty program management and turn their customers into loyal fans.
#1. Inspire action and reward customers for specific actions
Rewarding customers for specific actions is a sure shot way to reinforce their loyalty as well as achieve the results you want them to take. Businesses that want specific actions from their customers must find their motivation to act and the right trigger to inspire action. This is the key to desired action and true loyalty from customers.
Now businesses are rewarding their customers for particular actions. The action can be to use particular features of their products, to implement something before a certain date, and more. The businesses that adopt this type of loyalty program, ask customers to share their email addresses so that they can reward their specific activities.
#2. Reward for additional values
For a business to be successful, there are many things more valuable than sales and transactions. It can be favorable reviews, testimonials, referrals, and positive word-of-mouth publicity just to name a few. Some businesses offer separate loyalty programs to their customers that add values beyond transactions.
This includes taking part in a survey or a case study, visiting their booth at a trade show, attending a webinar, taking a reference call, leaving a review, and discussing their products or services on social networks. This is similar to the above point with a small difference. Unlike rewarding customers for specific actions, this rewards them for adding values that can help the business.
#3. Different programs for different segments of customers
Many businesses are tailoring their loyalty programs for different segments of customers. In this, customers belonging to a particular group are entitled to special offers, privileges, discounts, services, and more.
If a business has a segment of customers who are early adopters, it can offer them early access and give them the privilege to be the first ones to try the new products or services. If a business has some customers who are interested in discounts, it can offer them attractive deals and cash backs. Customers who are satisfied with the present offers and privileges will remain invested. It will also motivate some customers to try new products and services.
#4. Predict the needs of customers
When a customer buys a product or service, there may be some other offerings that can complement their purchase. Businesses that predict the needs of their customers and tailor personalized loyalty programs around that are more likely to have repeat customers.
This is one of the best ways to entice first-time customers to make repeat purchases as they get to see relevant products that they have not yet demanded. By looking at their current transaction, businesses can show relevant and useful products or services and encourage their customers to buy. Some businesses are leveraging artificial intelligence (AI) and machine learning models to understand their customers’ shopping history and buying patterns and predict when they will make their next transaction.
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#5. Enroll partners to enhance rewards and offers
In extremely competitive markets, strategic partnerships can be highly effective to enhance a loyalty program and boost its value. It can enhance brand awareness, provide more engagement and value, and give access to new customers, markets, and additional leads. Many businesses are building a strategic alliance with complementary brands and offering personalized loyalty programs. Some famous examples include Marriott and Emirates as well as Hilton Hotels and United Airlines.
The alliance, however, doesn’t have to be between big businesses. A local convenience store can partner with a pharmacy and enhance its loyalty program. The key to a successful strategic partnership is to have clear conditions from the very beginning. The terms, economics, value exchange, and redemption process needs to be as transparent as possible.
#6. Points plus cash options
Points plus cash options can be a game-changer for loyalty programs and the overall profitability of businesses. The program is attractive for those customers who want to access the benefits and rewards in a particular loyalty program but have insufficient loyalty points to avail of it. Under it, they can pay for products or services using a combination of accrued loyalty points and cash.
Many businesses have started using this type of hybrid loyalty program and are witnessing excellent results. In some, the redemptions have increased by 20 to 25 percent. Hospitality majors such as Radisson, Marriot, IHG, Choice Hotels, and more are using this type of loyalty program.
#7. Provide the chance to give back and do something good
When buying a product, many customers (a majority of whom are millennials) would like to give back to society and contribute to a good cause. As per a study, 60 percent of millennials would want to contribute their loyalty rewards to a good cause compared to 40 percent of baby boomers.
Many businesses are tailoring the loyalty programs that would allow their customers to avail themselves the loyalty points and donate for a good cause. Some of the examples include Southwest Rapid Rewards, Delta SkyMiles, Citi ThankYou, American Express Membership Rewards, just to name a few.
Taking everything into account
Retaining an existing customer is five times less expensive than acquiring a new one. In the time of changing customers’ preferences and buying habits, businesses must retain customers and encourage them to make repeat purchases. The solution is to have a strong loyalty program management in place and personalize programs for different customers. At LoyaltyXpert, we have helped many businesses to have strong loyalty program management. If you are looking for a loyalty solution provider to help you tailor personalized loyalty programs, contact our team to know how we can help you achieve your desired results.