{"id":9321,"date":"2021-06-30T01:01:49","date_gmt":"2021-06-30T06:01:49","guid":{"rendered":"https:\/\/flevy.com\/blog\/?p=9321"},"modified":"2021-06-29T11:26:30","modified_gmt":"2021-06-29T16:26:30","slug":"what-are-the-advantages-of-implementing-a-rewards-program","status":"publish","type":"post","link":"https:\/\/flevy.com\/blog\/what-are-the-advantages-of-implementing-a-rewards-program\/","title":{"rendered":"What Are the Advantages of Implementing a Rewards Program"},"content":{"rendered":"

\"\"Whilst most of us have signed up to a loyalty scheme at one point or another, you may be wondering how valuable they actually<\/em> are for businesses and whether you should create one.<\/p>\n

A well-designed loyalty program <\/a>can help you build customer loyalty, deepen engagement and attract new customers. \u00a0According to research, consumers account for more than 3 billion memberships<\/a> in loyalty programs, so there is an appetite out there for such schemes.<\/p>\n

With only 13% of consumers<\/a> being considered to be \u201ccomplete loyalists\u201d (i.e. they don\u2019t shop around), a good loyalty program can help draw customers in and keep even the most fickle customers coming back.<\/p>\n

A good loyalty scheme should entice customers back time and time again, so the reward for being loyal should be something worth having. Reward schemes that offer freebies, money off or coupons are often enough to draw customers in and keep them spending.<\/p>\n

With almost 15% of businesses<\/a> in the UK at risk of permanently closing their doors, it\u2019s never been more important to think about customer loyalty.<\/p>\n

What Are the Benefits of a Loyalty Program?<\/strong><\/h2>\n

Less price competition<\/strong><\/p>\n

Often when you\u2019re competing for customers online, consumers will look for the cheapest products. Unfortunately, with the rise of giants such as Amazon, you\u2019ll be unlikely to be able to properly compete with their price point.<\/p>\n

Instead, by having a loyalty scheme, customers may be more likely to purchase from you. Not only may they be able to receive coupons and discounts through accruing points, but loyalty programs also connect with your customers\u2019 emotions and collect valuable data. This means you can offer a more personal customer experience.<\/p>\n

On top of this, according to research by LoyaltyLion, 81% of emotionally invested consumers<\/a> will be more likely to spend more and tell someone they know about your business.<\/p>\n

Increased customer retention<\/strong><\/p>\n

Did you know that loyal customers spend 67% more<\/a> than new ones?<\/p>\n

Therefore, the purpose of a loyalty scheme isn\u2019t just to keep your customers coming back at regular intervals. Not only will they frequent your store more often, but they are likely to spend more when they do so.<\/p>\n

This coupled with the fact that acquiring customers costs five times more than retaining existing ones means that you may be missing a trick by not implementing a loyalty scheme.<\/p>\n

Increased customer lifetime value<\/strong><\/p>\n

Customer lifetime value is the profit attributed to the overall relationship with the customer. In short, it tracks how valuable the customer.<\/p>\n

With a loyalty scheme, the customer lifetime value rises to 79% within 3 months<\/a>, so it\u2019s not to be missed.<\/p>\n

What Type of Programs Are Most Popular?<\/strong><\/h2>\n

If you\u2019re looking into a loyalty scheme, there are three main types of scheme.<\/p>\n