Loyalty marketing is altering the rules of marketing in a way that is aimed to retain the existing customers.
FREMONT, CA:In case of an eCommerce store, online marketing is focused on digital marketing efforts that are focused on acquiring new leads. Effective search engine optimization (SEO) practices, active social media accounts, and monitoring the leads and conversion rates are crucial to enhance the sales. However, the marketers often miss out on the bigger picture as they are just aiming for the numbers.
The above strategy certainly works. However, the strategy focuses on acquiring new customers. A more sustainable marketing strategy tries to include the existing customer into the picture via loyalty marketing.
Loyalty marketing is focused on customers to encourage them to engage in repeat business with a company. Usually, such strategies involve incentivizing purchases and building up customer loyalty.
Reasons to Consider Loyalty Marketing
Here are the major reasons why loyalty marketing must be included by marketers while planning their marketing strategies:
Expensive Customer Acquisition
As per data from Forrest Research, acquiring new customers require five times as much than it does to retain the existing ones. Let’s consider each of the steps that must be followed before a potential customer is convinced for a purchase. Initially, they have to be made aware that a particular brand exists. Then they must be convinced to take the first step, i.e., checking out the website. Once they are considering the company’s credibility, they must be influenced in a way that guides them toward a probable purchase.
Such expensive procedures, both in terms of time and resources, can be avoided if the customers are educated about a brand. Later, as they are already aware of and have the first-hand experience with the products, their degree of loyalty can be strengthened by offering them a good deal at this point of time.
Existing Customers are Easier Targets
Since the existing customers already are aware of the brand, it is easier to convince them too. The probability of selling to an existing customer is 60 to70 percent. In contrast, the probability of turning a new customer into a probable buyer is 5-20 percent. According to the statistics from Gartner Group, 80 percent of a company’s future revenue will come from just 20 percent of its existing customers. Such statistics reveal that customer retention is crucial for the long-term profitability of a company.
Ways to Use Customer Loyalty
Customer loyalty seems daunting because customers are not bound by anything to remain loyal to a company. Even a supposed loyal customer can move to another brand citing various reasons. For instance, a customer might want to try another brand or a different brand may be more accessible.
However, there are customer loyalty marketing strategies that can ensure that the customers are sticking around for a relatively long period.
Gathering Customer Feedback
Although it’s common in business for customers to come and go, it’s the duty of the marketers and business owners to minimize the diversion rate. Before trying to retain the customers, it’s crucial to understand why they are leaving. A flipside approach would be to consideration of the factors that are enabling the customers to stay.
Celebrating the Most Loyal Customer on Social Media
Social media platforms can be used to give voice to loyal customers to express their experiences and feedbacks. The customers can showcase their actions and thoughts to their networks and beyond. Such platforms also offer a gateway for a company to encourage customer interactions via user-generated content (UGC).
Incentivizing Repeat Business with Rewards
Sometimes loyal customers jump over to another brand which newer and cheaper. Thus, customer loyalty must be backed by the necessary rewards or recognition by the company, thereby giving the customers a reason to keep away from new products. Employing a loyalty reward program is a way to encourage customers to continue to hold firmly to a brand. Such programs offer a sense of exclusivity and personal touch, along with a feel of getting something valuable in return for their support.
Encourage Loyal Customers to Participate in Referral Programs
Referral programs and loyalty programs are often thought to be similar. However, they are meant for different purposes. Referral programs incentivize customers who refer their customers to make a purchase from a particular company regularly. Generally, the referral program encourages the practice with incentives for both the referred contact as well as the advocate.