A loyalty program is a structured and long-term marketing strategy that entices customers to make frequent repeat business with a certain product or service. Usually, the customer loyalty program offers unique benefits like discounts and other rewards. In fact, a 5% increase in customer loyalty is likely to increase profit per customer by 25% -100%. Hence, more and more retailers have adopted loyalty programs to retain more loyal customers.
However, over time the loyalty program has been changed. Companies have customized loyalty benefits to acquiring maximum privileges from various loyalty programs. In this blog, you will find a comprehensive overview of how loyalty programs have been evolved.
Evolution of loyalty programs
When the internet was less widespread, customers were not much aware of the extra privileges the company can offer. Also, there was not much competition in the market. So, previously customers made decisions to purchase a product based on how much value they received for their money. In that sense, loyalty programs accommodated to decrease the cost of discounting and primarily worked as a cheap currency. Besides, customers had to visit a physical store if they want to enjoy the benefits of rewards.
Nevertheless, with the digital evolution, the approach towards loyalty programs is transformed. Merchants are employing various methods like email marketing, social media, loyalty cards, etc. to get maximum participation of customers. So, they earn loyalty points in multiple ways. For instance, shoppers now have the opportunity to earn them from transactions made via debit and credit cards, airline corporations and now even e-commerce platforms.
Redemption of loyalty points
In addition, most of the companies now allow their consumers to redeem their loyalty points through multiple circumstances of contact, rather than only at one place. The improved flexibility of redeeming loyalty points within multiple channels marks a notable shift from the scenario from the past. For example, the Indian payments system has conventionally ruled by paper-based transactions. Hence, the selection of digital payment tools was low, which influenced the reach of loyalty points.
Recently, loyalty programs included traditional plastic cards and gave users points and rewards after each purchase. These points could be redeemed by visiting partner retail outlets and restaurants on the next visit.
Loyalty programs now have also grown from being a mere mobile number database to recognizing customers, as well as mapping their purchasing behaviour, demographics, and other behavioural profiles, within analytics-based acumens. The customers treat rewards as the value-added experience with the company. Online-to-offline gifting platforms are already disrupting the space by allowing consumers to convert their points into their coveted brand currency and use them. This is certainly transforming the nature of loyalty, where the customer remains at the centre point.
In short, the way loyalty program works is being transformed by the digitalization and customers\’ behaviour. More and more businesses are focusing on rewarding their customers to sustain market competition and maintain their business growth. As it is costly to acquire than nurturing the existing one, it will be profitable for the companies to maintain the current customer base. Thus, they are experimenting with new tactics with the loyalty program. And, there is a doubt that the advanced approach has replaced the traditional approach for loyalty programs.
Admittedly, in the future loyalty program will continue to grow which will benefit the company to boost sales. Also, there are certain trends that decide the future of loyalty, have a look at those. With the increased competition getting more brand loyal customers is the ultimate goal for all businesses.
Do you want to design a loyalty program for your business?
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Connect with us to get more details on how we are crafting futuristic loyalty programs.