Why Your Brand Should Prioritize a Customer Loyalty Program

By: ITA Group
customer scanning digital loyalty card on iphone

It’s no secret that customer retention is crucial for brands to succeed. Acquiring a new customer is up to seven times more expensive than retaining one. Plus, a loyal base of brand advocates boosts profits and can help organizations weather the storm during times of uncertainty.

One of the best ways to increase loyalty is through a strategic customer loyalty program that uses data-driven insights to create personalized and engaging customer experiences. If you don’t have one in place, or it’s not performing as well as it could, start prioritizing it to drive customer loyalty. 

Why Is Customer Loyalty Important?

Before we dive into how loyalty programs provide value to customers, let’s look at the top five factors for why brands need to prioritize brand loyalty.

1. Demands of increased competition

With the rise of e-commerce, it’s easier for customers to switch brands or products, making customer retention a challenge.

2. Need for cost-effective marketing

Loyal customers tend to spend more than new ones and are more likely to act as brand advocates, extending your marketing reach to new audiences.

3. Push for higher revenue

Satisfied customers are more likely to try new products or services because they trust the brand, leading to increased revenue. Some studies even found increasing customer retention rates by just 5% led to profit increases of 25–95%.

4. Importance of better brand reputation

Happy customers are more likely to share positive reviews and recommend the company, leading to positive impressions of the overall brand. 

5. Increasing customer lifetime value

Retaining customers leads to higher customer lifetime value, increasing the organization’s revenue and profits over a long period of time.

Customer loyalty is a top priority because it has a significant impact on profits and long-term success.

Customer Experience Solution Assessment

What Are the Customer Benefits of Loyalty Programs? 

Increasing customer loyalty is a win-win for both brands and customers. When brands design a customer-centric loyalty program, their customers get additional value beyond just the product or service they purchase. 

1. Rewards and incentives

Discounts, free products or services, and exclusive offers all provide tangible benefits which make customers feel they are getting more bang for their buck and encourages them to keep doing business with the brand.

2. Personalization

By leveraging first- and zero-party data collected through loyalty programs, brands can tailor their offerings to individual customers. Personalized rewards and product recommendations make customers feel understood and appreciated, leading to even more brand loyalty.

3. Convenience

Loyalty programs make it easier for customers to do business with a brand by streamlining the checkout process, providing a single point of contact for customer service and offering nudges to remind them of important dates like product launches or service renewals.

4. Sense of community

Inviting customers to join a loyalty program can foster a positive sense of community among customers by creating shared experiences and providing exclusive access to events or products. This feeling of belonging can strengthen the emotional connection customers have with the brand loyalty over time.

5. Status

When strategically implemented, loyalty programs can provide customers with a sense of status or prestige, such as VIP or elite status, which makes them feel important and special to the brand.

Keep in mind that what motivates customers to spend more with a brand varies depending on interests, preferences and lifestyle. Every customer is unique, so your approach to rewarding loyalty should utilize data to create the personalized experience that will have the most impact. 

Related: Find out how to put your first- and zero-party data to work when crafting personalized experiences for customers.

Do Customer Loyalty Programs Really Work?

Absolutely! By focusing on customer retention through a successful loyalty program, organizations can reduce marketing costs, increase profits and create a more predictable revenue stream. Not only does research confirm it, but we’ve seen the results with our clients. 

Check out how replatforming an existing customer loyalty program helped a leading global petroleum refiner capture additional market share and drive engagement of their existing customers. 

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ITA Group

ITA Group custom-crafts engagement solutions that motivate and inspire your people. ITA Group infuses strategies that fuel advocacy and drive business results for some of the world’s biggest brands.