It’s one of the most resilient “bird-in-hand/two-in-bush” arguments. What is the most valuable business marketing approach; customer retention or customer acquisition? Research indicates that acquiring new customers is five times more costly than retaining existing customers. Data provided by marketing metrics shows that it’s 50% easier to sell existing customers than new customers, and the likelihood of upselling a new customer is 14 times higher than closing a potential new customer. The “old sage rule” of marketing, and just about every other measurable experience, says that 20% of any community creates 80% of positive results. If 80% of profits are derived from just 20% of customers, then retaining the loyalty of the 20 percenters becomes the goal for creating a successful retention strategy.
Loyalty programs are nothing new to brands or consumers. It is hard to imagine an airline, major department store or even a convenience store or credit card that doesn’t offer repeat customers some additional benefits in exchange for continued loyalty. Nearly 60 percent of adult consumers say that retention programs that offer rewards for repeat visits and purchases are important to retaining support, and 95% of consumers want companies to find new ways to reward them for their loyalty. Existing customers are 50% more likely to try a new product and spend 31% more per purchase than new customers. Clearly, retaining customers produces increased long-term value, builds stronger relationships with a brand, and allows a business to gain insight into customer attitudes and purchasing behaviors. So, what makes a good customer loyalty program?
Early loyalty programs focused on discounts and financial incentives to bring customers back for repeat visits, but today’s best programs focus on increasing customer engagement and provide additional touchpoints with customers. According to Gallup, “Customers who are fully engaged represent a 23% premium in terms of share of wallet, profitability, revenue and relationship growth over the average customer.” Listening to and understanding the customer is critical to developing a program that is effective. Multi-tiered programs can offer additional perks, discounts or special events for the best participating consumers. According to Capgemini, “86% of consumers with high emotional engagement say they always think of the brands they are loyal to when they need something, and 82% always buy the brand when they need something.”
Loyalty programs are changing as a savvy-consumer marketplace becomes ever more competitive. Brands that seek to capture the attention of customers will need to adopt marketing strategies that emphasize engagement with multi-tiered program structures that resonate emotionally with a targeted audience. MarketsandMarkets forecasts that the global loyalty management market size will grow from $8.6 billion in 2021 to $18.2 billion in 2026, making it essential for businesses to avoid complacency and quickly identify and react to new, relevant trends in loyalty program strategies.
To learn more about how Junction Creative Solutions’ (Junction) results-driven approach to growing a business can design an effective loyalty program for you, call 678-686-1125 today.