The value of loyalty to a brand and its offerings is regarded as a most valuable asset. It is therefore not surprising that many companies have tried to capture it in many forms of loyalty programs since the late 1700s.
What is a Loyalty Program?
A loyalty program is a structured approach to marketing that rewards and encourages loyal buying behaviour. Essentially a loyalty program is about satisfying client needs in a structured way to ensure a continued relationship with a brand.
All successful loyalty programs have certain basic aspects in common:
- Reward system: The purchases of registered customers are rewarded in a structured way.
- The medium or linkage point: This can be tokens, coupons, plastic cards or systems with a high level of sophistication which rely on mobile devices e.g. smart-phones or cloud based systems.
- Information: The more sophisticated a system, the more the information regarding purchases and clients that can be carried.
- Customer relations management (CRM): Good loyalty programs can be most important in effective CRM.
The Strategic Accounting Services loyalty program relies heavily on these aspects to satisfy client needs.
Why Do Clients Subscribe to Loyalty Programs?
It is tempting to simply refer to the obvious: clients support a brand if they see some reward in it for them. However, successful loyalty programs have at least two types of benefits for customers:
- Discounts and bargains: Retailers often make use of this option because most people like the idea of getting discounts, money back or something for free,.
- Transferable benefits: Customers like the idea of flexibility when it comes to making use of loyalty program rewards.
- Benefit escalation: Repeat customers are encouraged to increase the value of their rewards as they move up the loyalty ladder.
- Affiliation: People are born with a need to belong to social groups. E.g. club membership fulfils this need.
- Achievement: Loyalty programs that have different levels, or benefit escalation can satisfy this need.
- Ego needs: People feel satisfied within themselves when they see their loyalty rewarded. Advance releases of brand offerings to clients can provide them with a sense of exclusivity.
- Then need for personal growth: Self development and skills improvement have become much more top-of-mind recently. Thus rewards such as free training and free invites to business partner’s seminars as offered by Strategic Accounting Services have made loyalty programs much more desirable.
Why Loyalty Programs Don’t Always Work
All companies with brand offerings that satisfy similar needs are in competition for client loyalty, but not all of them have loyalty programs. Companies without them may offer their goods/services more cheaply than those who have, due to the cost attached to implementing a loyalty program. Loyalty programs don’t always add value. Clients are becoming much more intelligent in weighing costs and benefits of loyalty programs. Some organisations instil great brand loyalty through means other than loyalty programs.
Why Companies Need Loyalty Programs to Build Brand Loyalty
Brand loyalty and longevity can be greatly improved if loyalty programs deliver the following benefits:
- Customer retention: They prevent clients from defecting to other brands.
- Loyalty programs attract new clients: Perceived benefits of a loyalty program can help companies gain new customers.
- Cross-business promotions: Where companies have different brand offerings clients may decide to try new products and services as a result of loyalty rewards.
- Increased profit and sales: Customers are more likely to make additional purchases if they can get “more for less”.
- Improved CRM: The ongoing marketing process can be refined and targeted at specific clients, provided a loyalty program facilitates relevant information storage and retrieval.
- Appropriate customisation: Brand offerings can be customised to suit individuals, because loyal customers are more likely to provide a business with relevant information.
- Value proposition enhancement: Loyalty programs enable companies to discover additional benefits to customers. This can enable them to use new ways of promoting old products.
The Loyalty Ecosystem
The most successful loyalty programs create a loyalty ecosystem in which customers and brand representatives share mutually rewarding and beneficial relationships. In cases like the Strategic Accounting Services loyalty program the ongoing relationship assumes far greater importance. Customers are much more likely to show greater loyalty when they realise that their brand is also loyal to them. For this reason a successful loyalty program becomes a living entity, which serves as a medium for clients and suppliers to interact to their mutual benefit.