You know that B2C and B2B loyalty programs can help you retain your customers. But did you know that you can leverage your digital loyalty programs to upsell and cross-sell?
As per recent data, two out of every five businesses, or 42 percent to be precise, use loyalty programs to upsell and cross-sell their products or services.
What’s more interesting, big brands such as Starbucks use their loyalty programs to upsell their offerings. Upselling and cross-selling are massive parts of the structure of Starbucks Rewards.
An upsell usually happens when an existing customer is convinced to purchase more than they initially planned. Effective upselling tactics not only generate higher revenue but also result in brand loyalty to varying degrees.
As a sizable number of businesses and several big brands are already leveraging their customer and channel loyalty programs to retain their clients and upsell their products or services, you should do the same to remain competitive and maximize customer lifetime value.
At LoyaltyXpert, we have helped many businesses across a wide range of industries to retain and upsell by using high-quality loyalty programs. In this blog post, we have discussed the various ways loyalty programs enhance retention and upselling strategies. Read on to gain valuable insights.
Relationship between loyalty programs and retention rate
Loyalty programs can be extremely effective to retain customers, influencers, and channel partners and keep them engaged for a long time. But personalized ones have been shown to greatly increase customer retention. By providing customized and exclusive rewards and experiences, they increase the probability of retaining existing customers manifold.
A recent stat revealed that loyalty programs can drive more than half of a business’s customer base to increase spending. Another stat found that just eight percent of the most loyal customers of a business contribute to nearly half of its revenue.
Personalizing upsell programs has been found to enhance the retention rate
It’s one thing to use loyalty programs to upsell but it’s a different ball game altogether to personalize upsell programs. Businesses that personalize their upsell programs easily enhance customer, influencer, and channel partner retention.
Businesses can personalize their upsell programs by offering exclusive or customized rewards on the products and services they’re targeting to upsell to their existing and previous customers. By doing so, they increase customer lifetime value. Apart from that, by personalizing upsell programs businesses can efficiently monitor customer behavior and customize their offerings as per customers’ preferences. Businesses that reward repeat purchases entice their customers to stick with them for a long time.
Frequent upsells increase customer spending
A study conducted by Adobe found that frequent upsells encourage loyal clients to spend 67 percent more than new ones. By providing customers and business partners with higher-quality options, upsells can encourage customers to increase their average order size as well as spend more on the products and services they value the most.
By offering valuable rewards on their upselling programs, businesses not only encourage to buy more frequently but also increase their spending amount. Customers who purchase more premium items spend more as they know that they will get handsome rewards for their purchases.
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Data-driven upselling and retention strategies prove to be highly effective
Businesses that use sophisticated loyalty programs to enhance their upselling and retention strategies have massive advantages over their counterparts that use traditional or no loyalty programs. That’s because the former gets all valuable data and insights in one place. And, by using the data they can make data-driven decisions.
The data, which businesses can efficiently use, include demographic characteristics such as age, gender, location, education, and occupation as well as behavioral traits and purchase. By leveraging that, businesses can predict which customers will favorably respond to their upsell campaigns.
Product recommendations via digital loyalty programs
We have already discussed how sophisticated loyalty platforms can access valuable data to make data-driven decisions. The same insights can be used to make product recommendations. By analyzing user behavior, product recommendation engines can show relevant products and services to users. The more advanced a loyalty platform is, the more relevant the product recommendations are. That’s why it’s not surprising that businesses that use highly sophisticated loyalty software, register more upsells and higher retention.
All things considered,
Upselling plays a crucial role in creating better relationships with customers and is far easier than selling to new customers. As per recent data, the probability of selling products and services to existing customers is between 60 and 70 percent, while it’s just 5 to 20 percent when it comes to new prospects.
At LoyaltyXpert, we craft sophisticated digital loyalty programs for all types and sizes of businesses across industries. We have helped many of our clients to retain and upsell by leveraging loyalty programs. We can do the same for you. To know how we can help, contact us or book a free demo today.