Customer loyalty programs are a great way to increase your business. Seventy-five percent of businesses that offer customer loyalty programs see a positive return on their investment. Customers who participate spend more money at the business and are often more satisfied with their experience. Increasing customer retention by five percent can increase your business profits by up to ninety-five percent.
Loyalty program participation is rising. Over seventy percent of program participants earn incomes of over $100,000 per year. The probability of converting a regular customer to a loyalty program participant is highest among existing customers. New customers are less likely to sign up. Once customers sign up, they are more likely to continue to do business with that company.
However, many businesses get loyalty programs wrong. Most businesses offer a transaction-based loyalty program that rewards customers for spending more. Seventy-seven percent of these programs fail in the first two years. The programs that succeed reward customers for continued engagement, not just additional transactions. Businesses also need to keep in mind that customers feel that loyalty programs should benefit them. Marketing executives often feel that the programs should benefit the business.
Customer loyalty programs can be great for business, but those customers will only appreciate them if they feel that the programs are for their benefit and if they receive rewards that don’t always depend on spending more money.
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