Loyalty programs are growing in popularity. Customers want spaces that are specifically tailored to their interests and offer them immediate access to the brands they support.
While we have a clear understanding of what loyalty programs are designed to do, what good do they serve marketers and consumers?
We recently talked to Philip Pasma, who has a decade of experience in marketing and is passionate about the topic. Pasma, founder of real estate marketing agency Asterisk Marketing, shared these main loyalty program benefits:
1. Fosters brand advocates
As super fans of psychology, we’ve noticed just how often “like attracts like” in the world of marketing and consumerism.
When brands are loyal to their customers (this is most often achieved by consistently delivering quality products and services, offering valuable incentives, etc.), consumers are more likely to be loyal in return.
“Loyalty programs take customer satisfaction to an ultimate level, which in process leads them to do brand advocacy,” said Pasma. “These people influence their friends and family to go for the brand, and thus facilitate brand penetration. The use of a referral program can make the process of creating brand advocates even stronger and bring in more referrals in the long run.”
This type of brand advocacy also shows up in social proof, a psychology principle that explains why consumers tend to engage with brands if trusted sources support them.
Developing brand advocates is possible by keeping customer satisfaction at the forefront of your business’ marketing efforts. Loyal customers are a result of reliable products and services delivered by brands who care about their audience.
2. Cultivates customer joy
While you can’t put a price on joy, marketers sure do have a lot to gain from making their customers happy.
When Pasma mentioned a report from Invesp called “The Importance of Customer Loyalty Programs – Statistics and Trends,” he spoke on the powerful impact loyalty programs have on consumers simply by rewarding them for their participation.
“A recent survey showed that around 37.5% of consumers prefer a loyalty program because they love the joy of getting rewarded. The customers often get excited about what benefit they might get from the loyalty program, and when they get something good they really cherish that,” said Pasma.
Now, the value of joy isn’t lost on most marketers. We know that reward programs leverage positive emotions tangibly by giving consumers points they can redeem in return for some sort of brand-related earning.
Here’s why it works so well: Customers are given the opportunity to experience joy multiple times over the course of their customer experience — each time they get points and when they cash them in for a tangible reward. What’s not to love about that?
3. Collects consumer data and insights
We’ve talked about how consumers play an integral role in the success of their favorite brands. From generating brand revenue to influencing the acquisition of new customers, loyal consumers are one of your marketing team’s most important partners.
Pasma says marketers everywhere should be taking full advantage of the information consumers voluntarily give.
“One of the most overlooked benefits of loyalty programs is, it helps to gain important consumer data and insights. When a customer registers for a loyalty program, his information gets recorded in the company database. Companies can follow that information later for their omnichannel, offline and e-commerce segmentations,” said Pasma.
All of this data can support marketing efforts by giving you an inside look at what your consumer base is wanting to see from you.
“This information can be of great help while sorting out the best customers and tailoring attractive offers for a specific group of customers,” said Pasma. “Indeed, the data gained from loyalty program registrations can give companies a complete overview of customer behavior, their buying pattern, and preferences. This information is precious to invigorate a business’ inventory management, pricing, and promotional initiatives.”
Of course, loyalty program benefits are not limited to fostering brand advocates, cultivating customer joy and collecting consumer data — but these three alone should keep brands energized around loyalty efforts.
