How to Create and Manage Customer Loyalty Program

Customer loyalty is a set of programs specifically designed for encouraging loyal customer behavior. Basically, loyalty management focuses on encouraging and propagating repeat purchases by the existing customer. Be it of the similar product offered by the company or the varied services offered. Loyalty management involved both design and implementation of the entire process.

Defining Customer Loyalty Program in Marketing

A loyal customer is indeed the best gift a business can receive. The actual cost of retaining existing customers is just a little of that than actually thinking of acquiring new customers. Also, it is quite a known fact that a loyal customer generated more revenue at a relatively lower engagement cost involved. Thus. The lifetime value of the customer increases giving the brand a boost to sales and repeat customer possibilities.

Additionally, loyal customers often play a pivotal for the company endorsing the brand and its products & service often at no cost to the company! Having a successful loyalty management software is a very imperative option as today every successful business must have a retail loyalty program software customized for their business.

Thus, customer loyalty is a set of programs designed to encourage loyal customer behavior and highly motivate customers to make repeat purchases.

How to Creating a Loyalty Program

The loyalty program can be of different kinds and each has a different meaning altogether contributing to a brand’s reputation. Here are the types of most preferred loyalty programs-

Points Based Loyalty Program

The point-based systems are mostly based on the paradigm of the reward points earned through money spent on regular transactions. Businesses allow redemption of points against the purchase of any product/service or cashbacks. This kind of reward system is very popular in the retail industry. So, having loyalty points software is the best investment for almost every business. While a few businesses offer redemption points for donation or charity purposes too, which adds to the business value and leaves an impression on the customers too.

Tiered Loyalty Program

In this type of loyalty program, the entire process is based on levels of loyalty. The more customers spend or more frequently they spend will be the higher possibility of getting rewards. Most benefits or offers depend on the customer loyalty level. This kind of reward program is very popular with fashion, beauty hotels, aviation, etc.

The main benefits here are inclusive of free upgrades, privileges check-ins, early lounge access, or better possibilities for airline customers. Some extra perks include VIP passes in entertainment programs, early previews in the case of the fashion industry, and a lot more.

Paid Loyalty Program

Paid loyalty program is a kind of program that customers pay nominal fees upfront to be an exclusive member and such members get recurring discounts on the offered products or services or VIP benefits including free or priority shipping. (like amazon prime members etc.). These programs provide special privileges to the customers with a paid membership of their loyalty program.

Wrapping Up

According to MarketsandMarkets report, the forecast for the loyalty management market growth is ranging from USD 6.8 billion in 2019 to USD 10.0 billion by 2024 with a compound annual growth rate (CAGR) of 10.1% during the forecast period.

The existing customers are 50% are more likely for trying a new product of the company as well as spend around 31% more than the upcoming/new customers. Customer loyalty is an imperative aspect in the overall success of the company, that’s the major reason why your business is big or small and it’s equally imperative to understand how one can strengthen the business as well.