The traditional card-based B2C and B2B loyalty programs, which were introduced commercially in the 18th century, underwent a sea change between the 2000s and the 2010s. The transformation was a result of the rapidly changing digital landscape and the growing popularity of smartphones and mobile applications.
By leveraging the right technology, businesses could enroll their customers and channel partners into their digital loyalty programs easily, monitor their rewards and points, and prevent loyalty fraud. The wide-ranging benefits of digital loyalty programs accounted for their massive growth.
As per a report released by US-based market research firm Fact.MR, digital loyalty programs market is projected to reach USD98 billion by 2032, growing at a compound annual growth rate of 8.4 percent.
At LoyaltyXpert, we create high-quality digital loyalty programs for many types and sizes of businesses. In this blog post, we have discussed some of the major digital loyalty program benefits.
1. Better understanding of customers
Digital loyalty programs can help businesses gain a better understanding of their customers. Now, the question comes “How?”
Well, by tracking and analyzing customers’ behavioral and purchase data, digital loyalty programs provide companies with valuable insights into customer behavior and preferences. By doing so companies will not only monitor and map customers’ journeys in real-time but also respond to their queries and communicate with them if the need arises. As per SalesForce’s State of Connected Customer report, 64 percent of customers expect brands to interact with them in real time.
Businesses can use customer data to customize rewards and offers. You can discover how customers use loyalty programs and how they redeem loyalty points by using digital loyalty programs.
2. Tailored experiences
As per a new stat, four out of every five customers say that they are more likely to buy from a brand if it offers tailored experiences. Another study found that 87 percent of US-based customers are willing to have their activities tracked if the brand provides them with customized rewards and experiences. What’s more interesting is that a report released by PwC found that more than 80 percent of customers are ready to share their personal information for such experiences.
The data and insights you gain by leveraging digital loyalty programs can help you in tailoring customer experiences. You can customize rewards and offers based on customer preferences, which creates a more personal shopping experience.
3. Boost in customer retention rate
As digital loyalty programs can be used to provide personalized experiences, they can account for an increase in customer retention rate. Recent data reveal that nine out of every ten customers will buy again from a brand if they receive a positive experience.
A McKinsey research found that digital loyalty programs can retain tech-savvy customers by engaging and incentivizing them suitably. As per the report, brands that focus on enhancing customer experience report at least 10 percent higher customer retention. The same study found that three out of every five customers spend more money on a brand after signing up for a digital loyalty program.
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4. Enhanced customer lifetime value
Customer lifetime value (LTV) is an extremely important metric for businesses as it helps them to calculate the average sum of money a customer will spend on a business over a specific period. New research reveals that when a business achieves a seven percent growth in brand loyalty, the customer lifetime value can increase by 85 percent.
What’s more interesting is the connection between emotionally-connected customers and LTV. A study conducted by London-based market research and data analytics firm YouGov found that emotionally-connected customers have a 306 percent higher LTV compared to satisfied customers. As digital programs improve customer retention and loyalty, they can enhance customer LTV.
5. Higher purchasing frequency
Did you know that customers are 14 percent more likely to increase purchase frequency with a brand that has a top-performing digital loyalty program? A study conducted by McKinsey revealed that. The study also found that, apart from driving higher purchase frequency (also known as basket value), top-performing digital loyalty programs can enhance purchase frequency can enhance purchasing size, and increase revenue by 15 to 25 percent every year.
Another study conducted by Rare in 2019 found that 80 percent of Gen Z customers (customers born between 1995 and 2012) said that the quality of loyalty programs is directly related to their purchasing frequency. About three-quarters of Gen X (customers born between 1965 and 1981) and half of Baby boomers (those born between 1946 and 1964) said that they are more likely to increase their purchase frequency, because of loyalty programs. To enhance purchase frequency, you can leverage customized loyalty programs so that your loyal customers will buy more from you in a single visit.
All in all
Digital loyalty programs not only make it easier for customers to engage with your brand using their choice of devices but they also help you understand your customers better, create tailored experiences for them, enhance LTV, as well as increase basket size and value. Digital loyalty programs are extremely easy to create and run.
At LoyaltyXpert, we create all types of digital loyalty programs starting from brand loyalty programs, channel loyalty programs, and influencer loyalty programs for all sizes of businesses. If you are looking to run digital loyalty programs, then contact us today to book a free demo.