What are Loyalty Programs and Why Should You Bet On Them?


If you are reading this, it is because your clients have successfully passed through each of the stages of the Inbound Marketing Methodology, Congratulations! Now the next step is to get them to become permanent clients and even more than that, in spokespersons and promoters of your brand.

Although intuitively you want to go out and attract new clients, it is equally important to focus on the ones you already have, not only because they are the ones that will help you reinvest the money in new prospecting strategies, but because they will also generate new business if you manage to retain them well. . Furthermore, on average a current customer spend 67% more than a new one.

Figures like these really demonstrate how important it is to your business interests to proactively retain your existing customers, through the implementation of a program specifically aimed at reaffirming their loyalty and fidelity. I’m talking about a fidelazation program.

This type of program offers access to store credits, discounts, prizes or any other type of benefit that can affirm your commitment to the brand.

Why bet on a loyalty program?

Like any other marketing strategy, a loyalty program requires the resource allocation that you will most likely have stipulated for other activities.

If you are not yet thinking of investing in one, take into consideration the following reasons why you should consider it as a good option to improve your income and maximize the return on your investment.

Boost your business growth

Although each loyalty program can produce different results depending on the objectives set, there is no doubt that they have proven to be successful in numerous industries, each time they have been implemented as expansion and growth model.

Increase your income

According to Camilo Clavijo, Sales Manager at HubSpot for Latin America, attracting new customers can cost up to 6 or 7 times more than retaining the ones you already have.

In this sense, the resources you allocate to create and launch Loyalty programs have no point of comparison with the expenses generated by the search and acquisition of new clients.

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In addition, the expenses that you may incur when implementing a loyalty program are largely covered by the additional income obtained as a result of it.

Improve your online reputation

A satisfied customer is a happy customer”. This phrase should become a reference for your loyalty program. If your customers feel appreciated and valued, they will most likely remain loyal to your business and also recommend it to others.

Ultimately, this becomes a cyclical “word of mouth” process that will have a positive impact on the reputation of your company and consequently in its growth.

Increase your sales by including incentives

Customers value loyalty programs primarily because of the additional incentives that they receive when making a new purchase.

This type of incentive must be aligned depending on the number of times they have made a purchase, the item purchased, the investment made and especially based on the satisfaction of their wants and needs.

It should be noted, as I mentioned in a previous section, that not all incentive programs are the same, so the results will depend on your ability to produce the desired effect on your customers by providing them with worthwhile incentives.

Provide information about the behavior of your market niche

Carrying out a loyalty program in addition to fostering a closer relationship with your customers, will allow you get critical data to understand their behavior in relation to what do they avoid buying and what induces them to spend your money.

Through methods of try and failure, you will be able to determine what type of incentives cause a greater desire to purchase and which, on the contrary, do not produce the same results.

Make your customers happy

Offering rewards or incentives to your most loyal customers does not have any effect on the products and / or services you offer, but it does Mark the difference as for your competition and above all keep your customers satisfied and happy.

A loyalty program establishes a benefit ratio both for your customers and for the growth of your business.

Offers a broad set of rewards for a wider range of customers

Depending on the purchase intent of your clients (online or offline) you will be able to establish an incentive program that meets their needs.

For example, if you have noticed that the highest volume of sales occurs over the Internet, your efforts to improve the rewards system should be focused there. If, on the other hand, most of your business is carried out in a store, a program for this type of customer would be the most appropriate to obtain better benefits.

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On depending on your needs and the behavior of your customers you can select between one and the other option, or both.

Once it starts, it doesn’t stop working

When you have already established your loyalty program, due to its cyclical nature it becomes a machine that supports itself and that does not stop working.

The more the customer activates his purchase intention, the more rewards he will receive, which will result in him continuing to buy.

1. Define your goals

A loyalty program is not about offering benefits and discounts to those who buy one of your products or services. Rather, it is about finding ways to retain your customers to strengthen the relationship you have with them, so that, among other things, they attract the attention of those who are not yet familiar with your brand.

To do this, you must have a clear and measurable goal in mind. Do you want to reduce your chrun rate? Or maybe increase the life cycle of your customers? Or maybe increase your sales levels?

With this clear, you can begin to structure your loyalty program.

2. Analyze your customers

Being clear about the buying habits of your customers is essential for the success of your loyalty strategy. Knowing your customers and politely assuming what they will need allows you to more successfully determine their buying behavior.

Platforms such as HubSpot’s CRM are very useful tools that allow you to know in the first instance what aspects customers value your brand or business.

3. Choose the right program

Not all loyalty programs are the same, and not all consumer habits are the same. For this, it is important that you know different customer loyalty programs and adopt and implement the one that best suits your situation.

Here are the 3 most common customer loyalty programs to give you an idea:

3 examples of customer loyalty programs

1. Customer loyalty program based on points

The points-based customer loyalty program follows a very simple premise: the more money you spend, the more points you will get in return.

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Every time your customers purchase one of your products or services through your different points of sale, they will obtain a number of points based on the amount of money they have spent.

One of the clearest examples of this type of loyalty program is the one carried out by Almacenes Éxito in Colombia and in the region. With each purchase, customers receive at the end a number of points that they can later redeem with their identity document in promotions in stores or through the website.

2. Level-based customer loyalty program

This loyalty program uses a model structured in levels of loyalty. Thus, the more loyal customers are to your brand, (that is, the more money they spend on your brand), the more benefits they will receive.

The tiered customer loyalty program is a great way to prospect and attract customers. In addition, by relying on the aspects of gamification, you have the opportunity to place your brand as the first option.

3. Membership-based customer loyalty program

Loyalty programs have diversified in recent times, thanks to the fact that customers have demanded more variety and flexibility in benefits.

If your company has the opportunity to generate alliances with other brands, you can create a loyalty program that will not only allow you to prospect more clients, but will pave the way for future alliances with other businesses in your sector or industry.

A recent investigation determined that almost 70% of millennials tend to be loyal to the program that offers them the most benefits.

A clear example of this type of loyalty program is Apple, which by purchasing some selected products allows its customers to access other promotions from brands such as Nike, Classpass or HeadSpace.

Apple customer loyalty program

Source: Contact Center Hub

Loyalty programs have become a powerful marketing tool that contributes to reaffirm the loyalty of your customers, in addition to improving the Online Reputation of your brand

If you haven’t bet on one yet, this is the best time to start doing it.

Jerry Gordon

About Jerry Gordon

Webmaster, nature and tech lover. Jerry manages the day-to-day operations at DigiToolsadvisor. He loves enjoying his free time, but most of all, trying new tools to master.