Why are customer loyalty programs important?

One of the most valuable assets of a company is its customer loyalty. Measuring and modeling customer loyalty is essential to expand and retain customer relationships. What’s the connection between royalty and retention? Aren’t they the same thing?

This blog sheds light on how retention and royalty are connected and How do loyalty programs work?

When both customers and retailers feel they are getting something beneficial from the relationship, the connection gets intense.

Customers deliver you their support when they purchase from your business, and in exchange, loyalty rewards like discounts and freebies substantiate that they are acquiring something in return.

Here are 8 benefits of a customer loyalty program

Improves customer retention

Rewards are the most manageable way to guarantee customer loyalty. Everybody loves gifts and rewards in varying shapes and forms. However, Days are gone when a simple loyalty program with discount coupons sufficiently convinced customers to shop impulsively. Now, your program has to provide them with hosting giveaways, offering free devices, setting a loyalty point program, or providing access to the ultimate events of the season so you can express your gratefulness to your valuable customers.

Increases customer lifetime value and repeat business

Customer lifetime value is the amount of money that a customer will spend from purchasing a company until the end of the relationship.

Customer lifetime value is the total worth to a business of a customer. Evidently, it costs significantly less to retain existing customers than it does to gain new ones; therefore, boosting the value of your existing customers is a superb way to cause growth.

Comprehending the CLV aids businesses in developing approaches to gain new customers and keep existing ones while retaining profit margins.

CLV is different from the Net Promoter Score (NPS), which measures customer loyalty, and CSAT estimates customer satisfaction since it is closely connected to income.

• Fosters revenue
• Builds more robust customer affinities
• Differentiates a brand from its rivals
• Boosts word-of-mouth marketing
• Shows customers preference
• Conducts customer satisfaction

And if that’s not enough, here are a few statistics that verify the significance of loyalty programs.

•  According to a 2021 study, Customer loyalty programs aid create a more pleasing customer experience. Also, 75 percent of customers base purchasing decisions on their experience. Half percent of the interviewed customers stated that customer experience is more vital than one year ago.
•  According to HBR, companies with solid loyalty marketing programs boost revenues 2.5 times faster than their opponents and yield 100-400 percent higher returns.
• According to Accenture, About 90 percent of companies have some kind of loyalty program.

The Difference between Loyalty and Retention

• Retention is a measure of whether an existing customer continues to do business with you. Loyalty measures a customer’s inclination to choose a business commodity as a preference and indicates a specific resistance to competitors. Loyalty is a behavioral tendency that proposes that a customer will consistently respond appreciatively toward a firm and display the willingness to engage. The distinction is crucial. A customer who continues to interact with you may be kept but not necessarily loyal.

Types of customer loyalty programs

• Points programs
• Tier-based programs
• Mission-driven programs
• Spend-based programs
• Gaming programs
• Free perks programs
• Subscription programs
• Community programs
• Refer a friend programs
• Paid programs
• Cashback programs

Start on Loyalty Today with Mobiance

A perfect solution to hurdles of the loyalty programs can be brought about by Mobiance Token, which is a universal token for loyalty reward earning, giving, and converting. Mobiance is a rewards and loyalty solution built using blockchain and smart contract technology. The platform enables merchants to reward shoppers with Mobiance tokens (MOB), an ERC20 token for their purchases, and other valuable actions with configurable rewards. AI-based analytics results in increased sales by setting up and adjusting the rewards to achieve the best conversion rates and loyalty.