Most brands misunderstand when they hear the words- Consumer Loyalty Program. 

Their approach to the same is not how it should be. They start creating a program focusing on numbers, top-line and bottom-line pricing, budgets, and so on. 

In reality, programs that are created with an approach like this have a strong chance of failing!

Do you know why? The simple reason is that in such an approach it is the brand that thinks what is the best way to promote loyalty programs. They deduce the benefits according to what suits them best. 

In reality, a successful consumer incentive program should begin with; you guessed it right- the Customer!

It should begin by deeply connecting to the consumer and identifying what they like and dislike. The program should be built around the inputs and feedback of the consumers. 

In this resource article, try to examine some of the major benefits of a consumer loyalty program for brands. However, we list down the benefits, let us first look at how brands can set up their consumer loyalty programs. 

The Foundations of Consumer Loyalty Programs: By Marketing Experts

Referrals, Retention, and Revenues. 

For most marketing heads, this is what a successful customer incentive program is all about. This is true to an extent, but there is a lot more to it. 

Customer incentive programs are based on one simple behavioral principle- Rewarding Positive Behavior!

For brands, this is the foundation point. Businesses simply reward the positive behavior of consumers whenever they want to purchase something from the brand. 

Let us try to understand this with an example- 

You have come to buy an HVAC system from our dealership. Allow us to add two more free services in addition to the three that already come as standard. Additionally, since you are a repeat customer (who is under a loyalty program), we will offer you free installation services as well!

The above is the genesis of modern customer loyalty programs. Reinforcing positive purchase behavior lies at the heart and foundation of any incentive program. 

List of 7 Major Benefits of a Consumer Loyalty Program for Brands

  1. Creates a valuable understanding of customer’s needs- 

Consumer loyalty programs are so much more than encouraging customers into making repeat purchases. 

In this day and age, they have the potential to become valuable assets and knowledge banks for brands. What a customer thinks and feels about the brand can help it improve its product offerings and experience. 

This is something that will automatically help in driving sales and revenues. Leveraging the customer’s understanding is one of the biggest benefits of a loyalty program. 

Shedding critical light on preferences, likes, and dislikes can offer invaluable insights to the brand. This can help the brand with its future course of action. 

  1. Establishes in place the foundations of ‘Data Management’- 

When it comes to modern business organizations, data is as attractive as sales. Yes, you heard that right. 

The importance of data in present-day companies cannot be denied. One of the major benefits of putting in place a consumer loyalty program is reading all the data that is being generated. 

For example, data gathered can help shed light on buying preferences, show the kind of products that are being purchased, along with listing the specific nature of offers that are being availed. 

If a brand started with three major offerings in their consumer loyalty program, it can analyze which ones are performing best and scrap the others. 

  1. Prevents brands from engaging in the rat-race for pricing with competitors- 

While pricing will always remain a sensitive point for brands, it cannot be the only determining factor in loyalty programs. 

According to marketing experts, a loyalty program opens up a favorable opportunity for a brand. What is that? It allows a brand to stop competing as far as prices are concerned. 

The aim of any good and well-structured consumer loyalty program is to invoke the emotions of the customer. Brands do this by majorly creating the best experiences for their customers. 

A positive brand experience cannot be quantified in terms of prices. It can be connected only through emotions. This helps the brand escape the mad rat race for prices. 

  1. Promotes customer retention and value to the brand- 

The world is still in the midst of one of the biggest humanitarian crises ever- the Coronavirus Pandemic. We all know how businesses have been badly hit due to the pandemic. 

In such difficult times, great loyalty programs from some brands have allowed them to retain their customers. 

Not only has this helped some brands sustain themselves, but it has also allowed others to scale their businesses. Brands that were able to retain customers were encouraged to plan for expansion and growth. 

This means that consumer loyalty programs can go a long way in promoting brand growth and success. This benefit of a loyalty program does not get highlighted in mainstream resources. 

  1. Drives purchases, sales, and revenues for the brand- 

This benefit is the most obvious as far as customer loyalty or incentive programs are concerned. This is the number one consideration for brands who want to start such an incentive program. 

As these programs are centered around giving discounts, providing offers, and helping with freebies, customers view this as a VFM (Value For Money) proposition. 

What this does is make the deal appear attractive and tailored to suit the financial interests of the consumers. 

A good customer loyalty program helps in driving sales and ensures a steady cash flow for the brand. It attracts both new customers to the brand who prioritize pricing and deals as well as encourages repeat ones. 

  1. Converts consumers into brand ambassadors and advocates- 

Do you know why the biggest luxury brands do not advertise on offline or online channels? Why do they do that? They also do not have any celebrity ambassadors. 

For such brands, their customers are the real brand ambassadors. Luxury brands offer loyalty programs that endow exclusivity and privilege to their customers. 

This makes consumers of the luxury brand become their most vocal support. While this is something that luxury brands excel at, there is no reason why others cannot do the same. 

With a great program that provides both quantitative and qualitative benefits, customers can be converted into brand ambassadors and advocates. 

  1. Building deep emotional relationships and lifetime customers- 

Look around you and you will see individuals buying products or availing of services from the same brands. Why do they do the same, especially in an era where there are so many options? 

The answer is simple. Customers have come to trust and depend on the brand for multiple reasons. One major reason is how the brand makes them feel. 

This promotes deep emotional bonding with a brand and its products. A brand that can offer emotional value to its customers has a successful loyalty program in place. 

Creating lifetime customers is the dream of any company’s CEO or heads of department. When emotions are in the picture, pricing and VFM propositions fade into the background. 

The Bottom Line

A successfully executed customer loyalty program exhibits that the brand cares about its customers. These incentive programs can never be one-sided in nature. The feelings, benefits, and sensibilities of the consumers need to be taken into consideration. 

Happy and satisfied customers are what helps a brand sustain and grow itself. To ensure that the customers remain connected with a brand, a loyalty program should be in place. 

Businesses need to realize that the cost of acquisition of new customers is infinitely more than investing in loyalty programs. Additionally, data shows that repeat customers spend more than new ones. 

In this article, we have tried to list down some of the benefits of a consumer loyalty program. If you have any more questions, you would like us to answer, let us know in the comments below. 

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