Loyalty programs and referral programs are closely connected, that\’s why people usually confuse these two programs for rewarding the same thing. There are components of each type of program that can easily be twisted. A customer who brings referral businesses continuously, consider as a loyal customer. Likewise, some referral programs require customers to refer many people before obtaining a reward.
Loyalty programs are an excellent source for both retaining loyal customers and acquiring new customers to your business. The classic customer loyalty solution to attract more brand loyal customers often divide into two major standards; Loyalty and referral. For both of these programs, the ultimate goal is the same; to drive more customers for a business. However, sometimes merchants get confused about which program to implement. Go through this blog to get more details on how loyalty programs and referral programs work.
Let’s understand the main objectives for each program before we jump into further details.
The main aspirations of Referral Programs
1. Referral programs are designed to drive sales from new customers and encourage repeat consumers.
2. Employ the existing customers to refer their friends, family members, etc. by word of mouth actions.
3. Generally, rewards issued to both the referring and new customers
4. When a sale is made; rewards are typically earned
5. Businesses use many types of referral rewards such as store credits, discounts, free products, and gift cards.
The primary objectives for a loyalty program
1. It aims towards acquiring and retaining brand loyal consumers
2. Loyalty programs are intended to drive repeat business from loyal customers
3. Typically, customers who make repeat business are rewarded
4. It uses loyalty point systems, punch cards, rewards cards
You might be wondering, how each of these programs works. Well, though the ultimate aim of loyalty and referrals is the same they have their unique qualities to work differently. Hence, you need to identify business opportunities for whether to deploy loyalty programs or referral programs to increase sales.
So, when should you use a referral program?
When you want to drive more customers by word of mouth marketing tactics, referrals programs work best. Usually, a customer refers to family members or friends to make a purchase with your business. Referral programs are a strategic way to attract a continual flow of new customers coming in.
Besides, expanding your pool of consumers, referral programs also keep the program member a loyal customer by customarily offering incentives for spreading the word and bringing in more customers. Further, many businesses use a digital medium such as email marketing, in store recommendation, social media platforms, or online sites to promote referral programs. Generally, referral rewards are easy to redeem when a qualifying purchase behaviour occurs.
In addition, Referral programs are essential for business because marketing is done by the customers instead of an internal marketing team of a company. Customers share your business offerings with their friends and do all the convincing to make a purchase with your brand.
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But, when to use a loyalty program?
Loyalty program is the easiest way to entice customer participation by incentivizing customers repeat purchases. Customer needs to make certain purchases before being rewarded. So, businesses provide loyalty cards or use loyalty software to track customer purchases and reward them with the right incentives. Running a loyalty program that is customized to deliver rewards gives better results. Plus, loyalty rewards program customers do not need to be recalled of the program as your product or service is something that they buy on a regular basis. Likewise, referral programs, loyalty programs also promoted via social media, email campaigns to get maximum exposure.
Additionally, when you offer loyalty rewards, your customers feel valued. And, the value-added customer experience keeps them connected with your business. Along with a regular purchase, customers earn extra perks which attract them to get benefits from buying products or services from your business.
Therefore, both of these programs are beneficial for a company that wants to get repeat business. You need to identify the right criteria to introduce a program that helps to drive in more brand loyal customers. In the end, it is going to boost your sales whether it is a loyalty program or a referral program. So, wisely choose a program that helps to drive in more repeat business from your potential customers.
Nevertheless, as the competition is high in every spectrum of business, merchants are trying to attract and retain more loyal customers. And, loyalty programs or referral programs are one of the most efficient ways to acquire more loyal customers for your business.
Want to attract and retain more brand loyal customers for your business?
LoyaltyXpert offers various loyalty program solutions to empower your business growth by enticing customers to make repeat business with your brand. From customer loyalty to building channel loyalty, we render the best suitable programs to increase sales. Depending on your business standards, our loyalty expert team will guide you to fetch the best suitable rewards program for your business. Connect with us to get more details on how we offer the best loyalty program solutions.