Exponentially Improve and Grow Your Business with a Customer Loyalty Program!
If you’re an online business owner you’re probably completely aware of how important it is to engage potential customers, keep your customer loyalty levels high and finally the importance of a strong customer retention plan.
If you’re not aware of why this is important, here’s the quick version – an engaged, loyal and growing base of customers equates to larger profits and steadier revenue.
But, let’s break it down even further.
Customer loyalty is the willingness of a customer to perform certain activities (sales, referrals, etc.) for a brand repeatedly. So, how do you generate customer loyalty? How does an e-commerce company make the right choices and put forth their best foot forward to organize and execute a customer loyalty program successfully?
Let’s break it down with the overall goals of providing fantastic customer service, generating high levels of customer satisfaction, a positive customer experience, and leaving the end user with a feeling of value from the offered products and/or services they’ve purchased.
Goal 1: Make Customers Happy to Increase Your Revenue
How can a customer loyalty program increase revenue? It’s a fair question and for some, the answer isn’t obvious. Knowing that the primary purpose behind starting this type of program is to engage customers so they feel valued and happy so they will purchase more or entice others to purchase more is paramount. It’s not a selfish thing, it’s just a basic principle of business. Experienced e-commerce marketers and retail business owners know, understand, and embrace this simple fact.
Summing up remember these points:
- Loyal customers simply convert or spend their money with, brands they like more than other brands
- Loyal customers usually spend more in the long run and tend to make larger single purchases when compared to other one-off customers
- Loyal customers are frequently happy to highlight their positive experiences and give referrals to your product/services their friends and family members (i.e., become a brand ambassador)
Goal 2: Grow Your Customer Base
As stated above, a Customer Loyalty Program is a great help for driving word-of-mouth advertising for your product or service. Word-of-mouth referrals and publicity are highly effective in creating new customers. People will tend to trust a friend or family member vs. advertisements. Think about the last time you visited a restaurant or saw a movie because someone you know recommended it!
How does that translate for eCommerce or online retail business owners?
Well, a couple of quick points and then some interesting statistics.
Referred customers, because they already have a level of trust thanks to their friend or family member that referred them, tend to convert higher but they also tend to be more loyal once they have converted from a lead to a customer which means they are more likely to become a repeat customer. According to a Business Insider Intelligence report 48% of all US eCommerce in the fourth quarter of 2015 was comprised of repeat customers. That translated to over $2.7 Billion dollars and was on the incline from there. That fact is even more interesting if you consider just how vast the online market is for nearly any service or product.
Indeed, this fact indicates both love and trust of customers towards a specific brand and the value, which they receive from being outweighing the potential benefit related to low price or unique product and brand. As you can probably see by now, there’s a great expanding circle developing here… generate new customers, engage them to make them feel special, they refer others, engage the new customers to make them feel special, they refer others, and so on.
To put it another way, a Loyalty Program creates Brand Ambassadors and generates other “soft revenue”.
What is “soft revenue”?
Soft revenue is revenue that is created in the form of lowering expenses.
Acquiring new customers via advertising can be one of the largest expenses a company has to deal with both online and offline. Therefore, if eCommerce owners have the chance to engage and mobilize their current customers to help to recruit new customers, by simply giving them the tools needed for evangelizing their brands, it makes sense to do so. Particularly, since their loyal customer base is statistically shown to want the chance to become brand ambassadors, either officially or unofficially. Also, even with incentives for generating referrals considered, the overall cost is still considerably lower because the actual word-of-mouth part is free. The cost of a loyalty program tends to lower expenses and therefore increases income or generates more soft revenue.
Speaking of rewards, there’s a true mix of options and each depends upon the individual business. Here at NextBee, we have the luxury of not only using nearly a decade of experience from creating successful loyalty programs but also one of the most robust analytical systems ever created to measure nearly every metric for loyalty campaigns. This means that not only can we suggest what to start with for loyalty program rewards, but we can analyze current rewards and, using Machine Learning, we can predict what will be the next best incentives to offer for keeping clients engaged to get them to refer more customers, who become loyal customers, who refer more customers, etc.
If you want to learn more ways to grow your business through an eCommerce or Retail Customer Loyalty Program please connect with us.