By Jennifer Dawson,
Contributing Writer
Retail is changing. Gone are the
days when consumers had limited choice of shopping outlets. In their analysis
of shopper trends over the recent holiday period, ShopperTrak reported
Americans are spending more online — an increase of 18% compared with the
previous year. Also due to the freedom of online shopping, a customer is only one
click away from buying a product from a competitor. It is clear that retailers
need to change in order to keep their customers coming back time and time
again. This is especially important when adding a new customer could cost up to
25 times more than retaining an existing one.
What
Is Customer Loyalty?
Loyalty is a strong feeling of
support or allegiance. On a very basic level, for a customer to keep returning
to a store, they need a positive association or emotional experience that will
form a link between themselves and the retailer or brand.
Advertisement
The Loyalty Program report
states that on average, a consumer is linked to 14 loyalty programs but only
actively engaged with seven of them. Therefore, simply having a loyalty scheme
is not enough — it also has to keep people interested.
The aim of a customer loyalty
scheme is to encourage customers to return. This can either be through brand
loyalty or store loyalty. Keeping a customer interested in a brand’s new
releases can be a massive revenue generator. As a retail outlet, imagine a
customer coming back to make repeat purchases without having to run expensive
advertising campaigns.
Why
Implement A Customer Loyalty Scheme?
In a study by dunnhumby, the
financial benefit of implementing customer-centric reward strategies is clear:
customer-centric retailers witnessed a sales increase on average of 3%, while
their market share grew by 7%. There are many tried
and tested loyalty schemes that can
increase customer engagement with a retailer, resulting
in repeat sales. A great example of this is U.S.
grocery store Kroger which, via the popular Kroger Plus reward card, is able to
offer customers discounts based on items they actually buy. The card is so
popular that it is used in nine out of 10 transactions.
A loyalty scheme can be simple —
such as a customer loyalty game — and doesn’t have to offer a monetary reward.
Customers need to feel a bond with their retailer and demonstrating a shared
value is a great way to achieve this.
Loyal customers convert — many
retailers find that over 67% of their sales come from repeat customers.
Attracting new customers is a costly business too, so why not combine the two?
This is because rewarding loyalty can lead to new customers. If a customer is
happy with their brand choice or store, they will share their experiences on
social media and via word of mouth. The idea then is that existing customers do
a lot of promoting for your brand to build on your social media marketing
strategy.
A guide for any customer loyalty
program needs to be simplicity — if the customer doesn’t understand how they
get rewarded, they won’t keep coming back. Which in turn means that they won’t
bring their friends. Remember, customer rewards equal loyalty, which generates
sales and free positive marketing.
