How Loyalty Programs are Shifting to Include Short Term Benefits
Shopping habits have been seriously altered since the start of the pandemic this year. Not only are customers looking further into contactless purchases, but people are sticking with brands they know and trust. This can be worrisome for brands looking to run customer acquisition campaigns, but by efficiently utilizing marketing tools like loyalty and CRM, businesses may continue to thrive.
The reality is that it costs five times more to market to new customers than to retain your existing. This is because it takes more incentive, offers and extra marketing dollars spent to convince someone to buy from your brand. But, by maintaining strong relationships with existing customers it give business the opportunity to capitalize on the 80-20 principle (80% of a company’s profit will come from only 20% of their loyal customer base). Not to mention, utilizing loyalty programs gives brands a deeper insight into who their valuable customers are, provides the ability to understand customer purchasing habits, and in turn enables brands to target specific customer segments and deliver personalized rewards.
Now, a loyalty program generally focuses on long-term rewards where a customer is gifted one point for every dollar spent and when they hit a point goal a reward is given, but since the pandemic brands are starting to see a shift in customer needs to a more rapid rewards system.
So, what’s the benefit?
Rather than drawing out the customer journey to earn rewards, brands are adopting an instant gratification system to give customers the opportunity to earn discounts immediately at the time of purchase. During a period of uncertainty, instant rewards make customers feel valued, creates a memorable shopping experience, while also providing businesses the chance to increase ticket sizes.
Example: Southern California-based supermarket, Ralphs, provides shoppers with the option of joining their Ralphs Rewards loyalty card, a non-point-based program that automatically gives customers daily deals and opportunities to save on groceries with cardholder exclusive offers. Customers can browse the aisles and pick up items that are exclusive to their Ralphs Rewards members, and purchase these items at a discount. These rotating offers not only act as inventory control for their store location but may increase ticket sizes by giving customer discounts and incentive to buy more. The Ralphs Rewards program also allows you to register customer cards online and provides member only offers with digital coupons on the Ralphs website and mobile app – meeting the customers on their preferred channels.
The implementation of instant gratification is Ralphs driving force for returning customers. Not only is it a beneficial perk to receive daily offers, but it is also the key to ensuring loyal customers continue to feel valued.
Tapping into your existing customer base does not mean you are ignoring prospects; it’s building business from within by establishing a positive reputation for showing appreciation of existing customers. Their appreciation may earn you the business of their friends and family, allowing you to welcome in new customers. Keeping your existing customers top of mind and giving them incentive to return will ensure your brand will remain at the top of theirs.