Beware of false knowledge, “It’s more dangerous than ignorance.” The statement of George Bernard Shaw is extremely relevant for those business owners and marketers who have many misconceptions about loyalty programs. By harboring the myths, they not only forego the benefits of loyalty programs but remain far behind the curve.
At LoyaltyXpert, we believe that an engaging and effective loyalty program is a necessity rather than a luxury. Every business must leverage sophisticated loyalty programs and reap the benefits.
In this blog post, we have dispelled five common myths about loyalty programs so that you can make informed choices while running and managing loyalty programs.
#Myth 1: Loyalty programs are expensive
Many business owners and marketers see loyalty programs as an expense instead of an investment. A majority of them think that to set up loyalty programs they need to incur heavy upfront costs and hire a separate team to manage and run their loyalty programs.
But that’s not true. SaaS-based digital loyalty programs are not at all expensive and they won’t require any upfront costs. All businesses need to do is find a reliable loyalty solution provider that will enable them to run and manage well-designed loyalty programs.
A Bain & Company research found that a 5% increase in customer loyalty can enhance the average profit per customer by nearly five times. Another study revealed that well-performing loyalty programs enhance revenue from customers who use them by 15 to 25 percent every year.
#Myth 2: Loyalty programs are complicated
Some people think that loyalty programs, digital loyalty programs, in particular, are extremely complicated. For instance, A study conducted by KPMG found that more than two-thirds of millennials who participated in it said that they find it difficult to join most loyalty programs and earn points from them. Likewise, some businesses think that digital loyalty programs are extremely difficult to run and manage.
But the truth is the opposite. Digital loyalty programs are much simpler and easier to run and manage compared to traditional loyalty programs.
Unlike the latter, which involves the manual creation of excel sheets or card-based loyalty vouchers, businesses don’t have to build the former from scratch. They just need to partner with a reliable solution provider and use sophisticated loyalty program software to manage their B2B and B2C digital loyalty programs at the click of a button.
#Myth 3: Loyalty programs aren’t attractive to young customers
With so many choices and options than ever before, young customers experiment with different brands. But that doesn’t mean that they aren’t loyal to their favorite brands. Young customers comprise mostly millennials (people born between 1981 and 1996) and Gen Z (people born between 1995 and 2012). Collectively, they account for a majority of sales.
A study conducted by Rare Group in 2019 found a relation between loyalty programs and purchasing frequency.
- More than 80 percent of Gen Z customers said that they’re more likely to increase their purchase frequency if they like the brand’s loyalty program.
- Another study by KPMG found that 87 percent of millennial customers in the U.S. are enrolled in at least one loyalty program. They are most actively engaged with that program.
Level up your sales efforts!
Learn how to run data-driven Sales and Marketing campaigns
#Myth 4: Loyalty programs = offer and discounts
Loyalty programs are much more than offers and discounts. If you look at successful companies that have strong and effective loyalty programs in place, you won’t find any of them using offers and discounts to retain customers. That’s because offers and discounts carry a negative connotation.
An article titled ‘The Dark Side of Discounts’ cited many studies that revealed discounts not only reduce the efficacy of products but also cause suspicion in the mind of customers as well as dissatisfaction.
Trustworthy loyalty solution providers who have the expertise and experience in creating and deploying high-quality loyalty programs know that offers and discounts don’t matter to discerning customers. They focus on providing value and they work closely with brands to offer exceptional user experience and customer satisfaction.
#Myth 5: Successful brands don’t need loyalty programs
From Apple to Zappos, take any successful company. What do they have in common? Well, many things actually.
- Amazing products
- Exceptional customer service
- Strong brand value
- and of course, excellent loyalty programs
Despite existing for decades and delighting millions of customers year after year, all these iconic companies can’t afford to overlook their loyalty programs, not even for a day.
All successful brands know that the cost of attracting a new customer is five times more than the cost of retaining an existing customer. As they continue to grow, they reinvent its customer retention strategies and loyalty programs to keep its customers loyal.
If you think that you don’t need a customer loyalty program or a B2B loyalty program just because your customers love your products or services (and you register desired sales and revenue), then you should think again.
Taking everything into account
Now that we have busted these five misconceptions about loyalty programs, we hope that you’ll not be apprehensive about running effective and high-quality loyalty programs. In the present age, creating and managing high-quality loyalty programs is indispensable for every business.
At LoyaltyXpert, we create tailored and well-designed customer loyalty programs, channel loyalty programs, and influencer loyalty programs for all kinds of businesses. If you’re considering implementing successful loyalty programs, contact us for a free demo.