What are loyalty cards, and what are some of the biggest loyalty card benefits for customers and businesses? Keep on reading to learn more!
Acquiring new customers is a challenging task for many companies across practically all industries. It requires a good product, a brilliantly planned and executed Marketing strategy, and enough budget to get in front of the right audience enough times to make an impact.
However, if acquiring customers wasn’t difficult enough, there is something that can be even more difficult – retaining them. From the threat of ever-increasing competition, to the rise of technology that makes it so easy to purchase something and have it delivered on the next day to the other side of the world, it is no surprise that people are seamlessly switching from one company to another at the blink of an eye.
Nowadays, users have so many easily accessible options that they can constantly try new brands without getting bored, which means that achieving brand loyalty is a particularly difficult task for companies. Especially considering the obvious, but frequently underestimated fact that there are no borders on the Internet.
The importance of retaining customers
In a lot of cases, retaining customers is even more important than acquiring new ones. Let’s take a look at some of the key statistics that explain why:
- About 82% of companies agree on the fact that retaining customers is actually much cheaper than acquiring new ones.
- According to the Pareto principle, named after the economist Vilfredo Paredo, 80% of a company’s profits come from just 20% of the customers.
- Increasing customer retention by just 5% will often boost profits by 25% to 95%.
- Loyalty statistics data shows that the probability of selling to an existing customer is about 60-70%, a percentage which stays in the low 5-25% for new customers.
However, these are not the only statistics that prove why retaining customers is so essential for the consistent profits of many businesses. According to SmallBizGenius, the astonishing 75% of customers will favour brands that offer rewards, and 56% of them will stay loyal to those companies that “get them”.
With all these statistics in mind, it becomes crystal clear that having a loyalty card can play a key role in the retention of your customers, and that both customers and companies can profit from loyalty card benefits in the long run.
And the best part is, these benefits can be even more prominent and effective if your loyalty card is in a digital format that can be accessed by customers at any time, from any electronic device – as opposed to a piece of paper that can be lost or thrown away by mistake. But more on that later.
What is a loyalty card?
Before we move on to the key loyalty card benefits for customers and businesses, it is important to clear out the concept of a loyalty card.
A loyalty card program is an incentive plan that allows companies to gather data about their customers, and reward them with a product discount, coupon, points toward merchandise, or a free product in exchange for their voluntary participation in the program. Another purpose for loyalty cards is to build repeat business by offering exclusive incentives to participating customers that are not available for non-participating ones.
Loyalty cards often resemble plastic credit cards (and have about the same size), although they can take other shapes and forms as well, for example a keychain fob or a sticker (or, as we already mentioned, they can be in a digital format). They will typically have a magnetic stripe or a barcode that can be scanned at the POS (point of sale) for the verfication of the purchase.
The most popular loyalty card programs include a reward of 1 free product once you’ve purchased a determined number of products over a certain period of time. For example, getting a free coffee once you’ve gotten 9 stamps, considering that you get a stamp every time you purchase a coffee beverage from the company.
And now that we have a clear idea of what a loyalty card program is and how it works, let’s see the top loyalty card benefits:
1. Customer retention
As we already mentioned, the primary motive behind any loyalty program is to retain existing customers by offering rewards for their repeating purchase behavior. In other words, having a loyalty card can serve you as a tool for establishing certain habits for your customers, and ensuring that the next time they purchase a product like yours, they won’t switch to a competitor’s alternative that easily.
Instead, they will be incentivized to continue consuming your brand in their next purchases, since they will be getting a reward in the end.
Considering the fact that acquiring new customers can cost a company up to 5 times more than retaining existing ones, it is no surprise that implementing a loyalty program can be a very effective way to increase profits in the long run.
But of course, this benefit is not only for the company that is implementing the loyalty program. It also helps customers establish trust with a brand they like, and feel rewarded for something that they are purchasing anyway.
2. Increased revenue
Next on our list of loyalty card benefits for businesses is a significant increase in revenue.
Increasing customer retention is a great way to see a boost in profits because loyal customers have already established trust with your brand, and they are more likely to spend more money on your products and services compared to potential users that don’t know you yet.
Taking into account the previously mentioned statistic that increasing retention by just 5% might boost revenue by up to 95%, it is no surprise that keeping your customers satisfied and loyal to your brand will have a positive impact on your profits.
Because loyalty card programs encourage customers to come back for more to take advantage of the special incentives that you offer, they will shop more. And the more they shop, the more they will get in return as an incentive! So, it’s definitely a win-win for both customers and businesses.
You don’t have to offer a lot to reap the loyalty card benefits that you are aiming for – even a free cup of coffee or a discount for 10% off for their next purchase can go a long way.
3. A boost in product and brand awareness
Next on our list of loyalty card benefits for businesses is that these types of programs are a great way for increasing brand awareness. They not only make it easier for customers to remember you next time they are looking for a similar product like yours, but a nicely designed loaylty card scheme can also encourage them to try a new product.
For example, let’s say that you are a coffee shop, and you are offering an incentive for every 10 stamps that a customer collects (1 cup of coffee will be equal to 1 stamp). As a reward, instead of inviting to a free coffee beverage of choice, which is often the case for many loyalty programs, you could offer a muffin or a croissant so that the customer can try another product. This way, you can subtly promote other products that people can love, and get encouraged to return for more.
Additionally, you can change the reward every now and then to make sure that customers don’t get bored with your program. And this way, they can continue trying other products as well.
4. Spread word of mouth
Undoubtedly, one of the best ways to reach more potential customers is to get your existing ones to talk about you, and recommend you to their friends and family. For this reason, our list of loyalty card benefits continues with a technique that works wonders for many companies – word of mouth.
The thing is, people who are not aware of your products will not be able to recommend you simply because they don’t even know about you. So, having a good loyalty program is not only a great way to encourage customers to come back for more, but also to try new products that they can recommend to their friends and relatives.
Especially considering the fact that people who continuously get incentives and rewards for their purchase behavior are more likely to have positive feelings about your products, which we will encourage them to recommend you even more. In addition to your loyalty program, you could also offer an extra incentive for those customers that bring another potential customer to your shop. For example, you could offer a deeper discount or an extra stamp for each recommended friend.
5. Obtain valuable customer data
If the previous loyalty card benefits were not enough to convince you to implement a loyalty program into your business activities, this one probably will. Why? Because in the extremely globalized and digitalized world that we are currently living in, getting insightful customer data is more important than ever.
Usually, as soon as the shopper registers for a loyalty program, their data is immediately recorded in the company’s database. This data can later be used to enhance your omnichannel Marketing strategy, help you understand user behavior better, and can also help you personalize your offering to specific groups of consumers for better segmentation.
A correctly implemented loyalty program can give you a complete overview of your customers’ behavior and their overall preferences. However, loyalty cards that are limited to a plastic card or a piece of paper may not necessarily provide you with the information you need, especially if you don’t require any data upon signing up.
For this reason, you could also consider creating an app for your business, and adding a digital loyalty card that everyone can easily access and use on their electronic device. You can do this with a powerful Drag & Drop app builder such as Beezer. We also offer a set of Analytics tools that you can use to further understand customer behavior and boost your sales.
6. Effective cross-selling
As we already mentioned in the previous points, you can collect and use valuable data to cross-sell and up-sell your products in a more efficient and structured way. For example, you could offer extra discounts on products with higher value that customers are less likely to purhase without the incentive.
Additionally, another one of the loyalty card benefits that companies can take advantage of is increasing demand in slow seasons. For example, offering as an incentive a product that is less popular in summer, and people wouldn’t purchase as much otherwise.
7. Make customers feel appreciated
Next on our list of loyalty card benefits, although this one is more oriented towards customers (but has a positive effect on businesses), is increased customer satisfcation.
Providing rewards, discounts, coupons and extra incentives the more they purchase from you is a great way to make them feel appreciated and satisfied with your company. And what’s more, they might even have more patience and empathy in case of mishaps.
8. Attract new customers
Of course, having a loyalty program or card is not exclusively about retaining existing customers. A well-designed scheme that provides good rewards will make new people want to join in, and reap the benefits that they could get from participating in it.
Many businesses make the error of creating loyalty schemes whose awards are simply too difficult to reach. So, a successfully implemented and easily accessible system will make more and more new customers join the bandwagon to take advantage of all the discounts that will come with it.
9. Get feedback
Rewarding loyal customers is not only about making them purchase more and more to increase a company’s profits. It is also an excellent communication channel to approach them and get valuable feedback from them. What is it that you are doing right? Is there anything that you could be doing better? Are they completely satisfied with your loyalty system?
Getting feedback is definitely one of the most loyalty card benefits that we could think of. After all, nobody can give you a better perspective on the things that you are doing right, and the ones that you are failing at, than your existing customers.
Implementing a digital loyalty card system
Of course, in order to reap the loyalty card benefits that we described above, you will need a loyalty card first. And the best way to approach this strategy is by doing it in a digital format, in a way that you can reach your customers at the right place, in the right time, and with the right incentive.
And what better way to do that than a progressive web app that can be created in just a few minutes, and users can access directly with a single link? Just create your app today – without any coding needed, drag and drop the loyalty card feature that we just added to our feature collection, and you are ready to reap all the above-mentioned loyalty card benefits!