Loyalty Programs: How they work and benefit buyers
Loyalty Programs: How they work and benefit buyers
The value of customer loyalty for any business can never be overemphasised. When customers are loyal to your brand, it shows that your product, service, and overall business model works. A loyal customer repeatedly patronises your business and is likely to influence other potential customers to do the same.
Today, there are various ways businesses work to improve customer loyalty. This includes reducing costs, improving product or service quality, easing communication channels, etc. By and large, one of the most effective techniques for bolstering customer loyalty is through loyalty programs.
What Are Loyalty Programs?
A loyalty program is a program set up by a business to help retain customers through strategies such as rewards, discounts, rebates, free products, and so on.
Loyalty programs are designed to fulfill one purpose – ensure customer loyalty, and depending on each company's business model, the details of their loyalty programs may vary.
Some of the most common types of loyalty programs are:
Points program:
Here, the customer gets points for every purchase, which can be redeemed for discounts on future purchases or merchandise.
Cash Back Loyalty Programs:
although similar to the points system, there are a few differences. Customers get a specific amount back when they spend a certain amount in the cashback program. The amount of cash gotten back may depend on how much the customer spends.
Paid Programs – VIP member club:
in this system, businesses create different levels of loyalty with varying packages. The higher the level, the more the package offers. Typically, customers will have to pay to get to a higher level, hence the name "paid programs."
For instance, the general loyalty package may feature a 2% discount per purchase, while the VIP member club will feature a 10% discount alongside other exclusive offers.
Other types of rewards are Value-Based Programs, Tiered Loyalty Programs, etc.
How It Works
The mechanics behind loyalty programs are pretty simple; "the more you buy, the greater your reward." Customers will join the program by registering their personal information with the brand and will receive a unique identifier. The identifier can be a membership card, numerical ID, or anything else.
Each time a registered customer shops with the brand, they get points based on the volume of items bought. The accumulated points can then be used to get discounts for their next purchase.
Benefits of Rewards and Loyalty Shopping Deals
While most people think loyalty programs profit only businesses, they also offer tons of benefits to buyers. As a customer, patronising a company with a loyalty program can significantly transform your shopping experience. Here are some core benefits you stand to gain:
Makes shopping easier
Virtually every item you want to shop for has more than one brand producing the same product. Imagine the stress of thinking about which product brand to buy every time you go shopping. Daunting, isn't it? Loyalty programs take shopping to an entirely different level where buyers effortlessly shop items because they already have a preferred brand.
Saves time
Whether it's done online or offline, shopping can be time-consuming. From reading product descriptions to ensure you're picking the right item to checking reviews and ratings every time you want to shop, so much time can get squandered in the process.
When you patronise a brand that offers rewards for your loyalty, you're likely to stick with that brand, which will save a great deal of shopping time. Now, no more spending long hours searching for products since you already know what you want.
Saves money
Your loyalty points can be a huge money saver, especially when they're accumulated over a long period. In fact, you may end up paying about half the price of an item which can help you channel funds to other important areas.
In one survey, 74% of consumers said they are more likely to choose a store with a good loyalty program as it helps them save costs. Imagine having accumulated points worth $100, and you need to purchase an item worth $150. You'd rather stick with the same brand and spend less ($50) than go elsewhere and pay the full amount.
Makes shopping more enjoyable
Let's face it; spending isn't really that enjoyable, especially when you're within a tight budget. Even when you know the product is essential, handing out your hard-earned cash makes you feel like you're robbed. On the other hand, we all love the idea of saving money as it makes us feel good.
As a buyer, purchasing from brands with loyalty programs helps make shopping more enjoyable as you know that despite spending your cash, you'd be rewarded at the end of the day.
Improves product or service quality
Businesses that offer loyalty programs are often concerned with customers' satisfaction. Loyalty programs don't only help buyers get rewards from purchases; they equally help businesses monitor customer experience and satisfaction. It takes more than offering rewards to keep a customer, even though rewards can be a powerful source of motivation.
Buyers are often concerned about satisfying their needs with the products before anything else. An increase in loyalty program engagement implies that the business is providing top quality, while a decrease in loyalty program engagement may indicate problems in quality.
As a result, businesses can adjust their operations to improve product or service quality, helping customers to derive maximum satisfaction from their purchases. Thus, loyalty programs will help customers get greater quality from the same product, resulting in increased customer satisfaction.
Finally, loyalty programs help buyers develop a greater connection with a company, leading to improved customer satisfaction and happier shopping.
Sean Kerr
Author