How Loyalty Programs are Shifting to Include Short Term Benefits
Shopping habits have been seriously altered since the start of the pandemic. Not only are customers looking further into contactless purchases, but people are sticking with brands they know and trust. This can be worrisome for businesses looking to run customer acquisition campaigns, but by efficiently utilizing marketing tools like loyalty and CRM, they may continue to thrive.
The reality is that it costs five times more to market to new customers than to retain your existing consumer base. This is because it takes more incentives, offers, and marketing spend to convince someone to buy from your brand. But, maintaining strong relationships with existing customers gives businesses the opportunity to capitalize on the 80-20 principle, the idea that 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 most valuable customers are, provides the ability to understand customer purchasing habits, and thus enables brands to target specific customer segments with personalized rewards.
Many loyalty programs generally focus 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. Yes, 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. During a period of uncertainty, instant rewards make customers feel valued, and create a memorable shopping experience, while also providing businesses the chance to increase ticket sizes.
Example: Southern California-based supermarket, Ralphs, provides shoppers 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 snag deals on items that are exclusive to their Ralphs Rewards members. These rotating offers act as inventory control for each store location, and has the potential to increase ticket sizes by giving customer discounts and incentive to buy more. The Ralphs Rewards program also allows for customer cards to be registered online and provides members-only offers with digital coupons on the Ralphs website and mobile app, meeting the consumers 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 a way of building business from within. You’re establishing a positive reputation of showing appreciation for 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.