With the market saturated with all kinds of competitors, selling alone is no longer enough. To ensure long term success, businesses will need to go beyond just doing transaction per transaction sales and focus on converting each sale into another return customer.
Establishing relationships with your customers to encourage their returns may seem difficult and requires consistent effort. An effortless yet cost-efficient means to do this is to optimize your existing customer base through a strong customer loyalty program.
Why Customer Loyalty Program is Important
1. Repeat customers are your main source of revenue
Though customer acquisition is important because without new customers there won’t be repeat customers. However, many businesses have yet to recognize the potential that optimizing existing customers has to offer by allocating the disproportionate budget and efforts on customer acquisition as compared to customer retention.
According to the Adobe Digital Index report, 41% of an online store’s revenue is contributed by only 8% of its customers; this 8% is made up of your repeat customers.
2. Access to Insights with Digital Loyalty Program
Unlike in the past, where customer loyalty programs are either in the form of a reward stamp or a membership card, many customer loyalty programs now are often linked to an online platform.
The platforms usually offer you as a business owner, a variety of features that gives access to your customer insights, purchasing trends at your store, and many more. This way you get to truly maximize and strategize your response based on these insights.
3. Save Time by Automating Your Loyalty Program
Signing up with a digital customer loyalty program means that the platform will help run necessary customer loyalty campaigns on your behalf to retain, engage, and even acquire new customers.
Customer loyalty programs in general improve your customer experience and satisfaction without exerting too much effort from your business. Satisfied returning customers are not only easier to sell but are also more profitable to the business.
Types of Customer Loyalty Programs
Now that we’ve established the importance of a customer loyalty program, let’s go into the different types of customer loyalty programs available and how they work.
Through this program, every time a customer spends or makes a purchase at your outlet, they will be rewarded with a certain amount of points. They can then use these points to redeem rewards.
The Cashback loyalty program encourages customers to save more by spending more. This helps businesses to sell more while increasing the customer's retention rate.
The referral customer loyalty program relies heavily on the marketing strategy of word of mouth. With every new customer obtained from recommendation, the customer will be rewarded with either discount, Cashback, freebies, or even store credits.
Paid program or usually more known as VIP memberships works in a sense that customers will have to pay a monthly or annual fee to enroll as a VIP member to gain access to special services, discounts, packages, and other exclusive products.
With the gift cards program, customers are able to purchase the value they want and you will receive an up-front payment upon every purchase.
With all the available options, signing up for a loyalty program is usually easy and effortless. It is crucial that you identify one that fits you best and determine why before you proceed to choose one. You can read more on the different types of customer loyalty program here.
Why Cashback is The Next Big Thing
Cashback is not a relatively new term. It was first introduced in 1986 as a way for banks to encourage cardholders to spend more by giving back a certain percentage of the amount spent on the customers.
The idea behind using Cashback is to encourage repeat visits to the store through cash rewards. Most often, Cashback is more about making a long-term investment for customer retention.
Fast forward to today, with the growing number of businesses looking for the best loyalty program that will serve them well, and with the help of technological innovation, Cashback is now adopted as a customer loyalty program that offers businesses the opportunity to benefit from these monetary-based incentives.
More Businesses are Shifting to Cashback
As the demand for mobile customer reward programs increases and consumers continue to respond positively to Cashback across more areas, the desire for businesses to use this cash-based reward system also grows.
According to the Bond report, 71% of loyalty program members view cashback as a crucial benefit and the Mintel survey also reported that 51% of the respondents view monetary rewards as important in a loyalty program.
Proven Customer Loyalty Program
While Cashback may be gaining popularity with increased demands, it is still in a very early stage of adaptation. Some merchants have also yet to embrace this proven trend thus missing out on the massive potential that this customer loyalty program has to offer.
Based on the retail trends report 2020, merchants in Malaysia and Singapore have discovered an untapped revenue potential with Cashback. The report stated that with every 100 customers, a minimum of 70 customers returns to the same merchant which equates to driving 70% of repeat customers.
The report also revealed that for every RM1 Cashback issued, merchants will gain RM9.30 on Return of Investments (ROI) which is higher than Google Ads for Malaysia. Meanwhile in Singapore, for every $1 Cashback issued, merchants will gain $8.5 in Return of Investments (ROI) which is also higher than the ROI of every $1 spent on promoting your outlet on Google Ads.
Aside from that, the report also highlighted Cashback is proven to optimize non-peak hours sales by 2.5 times both Singapore and Malaysia. These numbers serve to prove the effectiveness of Cashback in customer driving customer retention and maximizing capital.
With that said, if you’re looking for a platform to help you set up Cashback for your store, Fave’s Cashback might be the answer for you. It comes along with the benefit of being a part of the Fave’s ecosystem which goes beyond just being a customer loyalty platform. The variety of features that come with setting up Cashback with Fave ranges from receiving customer insights to accepting all kinds of contactless payments.
We are currently in the midst of witnessing a phenomenal change in the shift of customer loyalty program. As innovation continues to progress, we predict that this solution will only improve with time. This is the time to take action and experience the limitless potential that this customer loyalty has to offer to your business - first hand.