Why Do Loyalty Systems Work?

Loyalty systems are a great way for businesses to maintain relationships with new and existing customers. They attract new business by offering incentives to make repeat purchases while ensuring existing customers feel important to your business - in turn making them more likely to encourage friends and family to check out your goods and services. 

Here are some of the key reasons why setting up a loyalty system for your business could be the smartest move you ever make: 

1) Learn valuable information

By allowing customers to earn points when registering with you, they willingly allow you to contact them through their email address. This means you can target them on future marketing campaigns as well using this data to see what techniques are most successful, allowing you to refine your methods to be the most effective. 

2) Take advantage of the power of word-of-mouth

When customers are satisfied with your loyalty program, they will be much more willing to recommend it to other people. A recommendation from a friend or family member is many times more effective than a simple advertisement. You can use this to your benefit by allowing people to gain rewards from referring new customers, building your consumer base even further. 

3) It’s cost-effective for the user

By definition, a loyalty scheme rewards repeat purchases, meaning your customers will associate you with saving costs. The longer they stay with your business, the better the benefits. This is an important psychological benefit that few smart consumers will want to miss. 

4) You can offer special benefits to increase customer satisfaction

Delight your customers with offers unique to them, such as a birthday gift. Personalised treats like this are a surefire way to strengthen their loyalty to your brand. 

5) Personalised suggestions

Use data gathered from your loyalty scheme to provide bespoke product and service suggestions for your customers. This will greatly increase the chance of them making a purchase as they will close to their wants and interests. This is like laser-focused product placement. 

6) Identify your best customers

This kind of scheme can help identify the profile of your best customers, meaning you can observe their behaviours and tailor future marketing programs to capture more of their attention and attract similar consumers. You can even create unique programs that use them to help develop your business, both expressing gratitude as well as strengthening their loyalty to your brand. 

7) Reduce marketing costs in the long-run

Rather than placing expensive ads blindly, a loyalty scheme will help you target your future adverts more effectively, saving time and money on marketing channels that bring in one-time customers who prove less valuable to your business than more committed shoppers. 

Reward schemes and loyalty programs can help practically all businesses, big or small. They’re a useful method to attract and retain customers, as well as providing valuable information on how best to focus your marketing efforts in the future. Use them effectively and they’ll help your business go from strength to strength.