04.08.20163 min read

Why Customer Loyalty Programs are Important for Your Business [Infographic]

The idea behind customer retention emphasis is simple: There are only a finite number of customers any given business can serve. But returning and loyal customers is what makes it possible for the business to perpetually make sales and stay profitable. If we may borrow Pareto’s principle, 80 percent of your sales come from only 20 percent of your customers.

Why customer loyalty programs are important

Infographic Source

According to Invesp, juts an increase of 5 percent in customer loyalty can lead to a 25 percent to 100 percent increase in profit per customer, and on average, loyal customers are 10 times more valuable than first-time customers. Therefore, it is clear nothing beats customer loyalty and retention when it comes to guaranteeing business continuity. So how do you increase customer loyalty?

Customer loyalty programs are very effective when it comes to retaining customers. In a competitive market where customers can make snap decisions to switch their service providers or suppliers, customer retention programs can make all the difference. For instance, Starbucks has a reward program called My Starbucks Rewards which has significantly contributed to the coffee giant’s growth and profitability.

According to the infographic on how loyalty programs are influencing buying influencers, 69 percent of customers say that loyalty programs influence their choice of retailer. Customers join loyalty programs because they want to save money (57 percent) and receive rewards (37.5 percent). Fifty percent of customers say they would change their behavior to reach higher tier of customer loyalty program.
Accordingly, 76 percent of customers believe that loyalty program deepens their relationship with brands. This view is shared by 64 percent of retailers who view customer retention programs as the best way to connect with customers.

Customer retention isn’t always easy

Sustained customer loyalty programs can see the average customer spend 67 percent more. This means that loyalty programs aren’t short-term customer retention strategies. The longer the customer enjoys your loyalty program, the more likely that person will remain loyal to your brand.

However, many brands say customer retention is their biggest obstacle. Customers are becoming more and more enlightened and choosy; they won’t settle for second-rate products even if that means switching companies. Sixty-six percent of customers say they consider poor customer service as the main determinant when changing companies. So it is important to ensure you have excellent customer service, as well as a great product.

Brand recognition is also another important factor that increases customer loyalty. In other words, customer retention doesn’t just happen. You have to work hard for it.

If you haven’t set up a loyalty program, then you are missing out on huge businesses because 83 percent of customers say loyalty programs can influence them to make a buying decision. Almost any business can implement a loyalty program. Although setting up reward programs requires effort, it is worth it. Loyalty programs can help improve your brand recognition, increase growth, and improve customer service.

This article was written by Stacey Rudolph from Business2Community and was legally licensed through the NewsCred publisher network.

Referential Treatment: How to Ask for Referrals that Help Grow Your Business - Download Now
Was this post helpful?
Created with Sketch.
Infusionsoft cornerstone spinner
close button
Subscribe to our weekly newsletter!

5 Reasons to Subscribe:

1. Weekly tips to dominate sales and marketing

At our core, we're focused on helping you become a sales and marketing machine. We tap into the genius of the best salesfolks and marketers out there to give you daily tips to grow your leads, make more sales, and keep more customers.

2. Expert small business resources that cost you zero dollars

Want to go deep? We have you covered with free guides, webinars, and tools on a range of topics from marketing automation, CRM, and digital marketing to building sales and marketing strategies from the ground up. All for free. All for you.

3. We're focused 100 percent on small business success

We exist for one reason: helping small businesses succeed. We give you the ideas and insights you need to blow the competition out of the water. We serve business owners who are hungry to put in the hard work to grow their business and own the market.

4. We do the work for you

Running a small business is a 110 percent endeavor. You don't have time to surf Internet for the best small business insights and ideas out there. We'll do that for you with the best original content from our team and from industry experts and small business owners.

5. But wait, there's more!

Small business success means more than just sales and marketing, so we also hit on a range of topics to help your small business thrive, including personal and business growth, customer service, and business management.

6. Righteous GIFs

OK, we said five reasons, but we like to overdeliver...and GIFs. We really like GIFs. You're bound to see some righteous ones.

GIF of Ferris Bueler principal's assistant

P.S. We'll never give out your information. We'll only use it to send you awesome content and resources, if you're cool with that.