You’re probably tired of reading about the negative impacts of 2020.
Well, this isn’t about 2020!
This is about 2021, which is on the horizon and we’re all hoping for it to be prosperous … personally and professionally.
Retailers have absorbed revenue hits in 2020 and will be working full steam ahead to recover in the coming year.
Retail leaders will be improving customer strategies and launching brand new initiatives that will generate new revenue streams.
Customer loyalty needs to be on your “ways to generate revenue in 2021 wish list” and here are 3 reasons why.
Loyal Customers Shop More and Generate Revenue for Your Brand
Having loyal customers is every retailer’s dream, right?
Loyal customers generate revenue. They purchase more frequently and spend more when they do because they know there’s something in it for them.
Consider that a loyalty increase of 7% can boost lifetime profits per customer by as much as 85%.
When they have incentives to shop with your brand, whether it’s because of instant rewards or unique experiences, they’re not only going to come back more often, but they’re also going to share their stories with their friends.
Premium loyalty members are even more valuable.
In these programs, members pay a fee in exchange for enhanced benefits that they can use whenever they shop. Amazon started this trend with Prime in 2005 but many other retailers have jumped on board, mostly recently Walmart.
It’s the opposite of a traditional, transaction-based loyalty program where the customer makes purchases over time to get rewards later.
At its core, premium loyalty is about putting the customer at the center of everything you do.
That’s why successful retailers are thinking about premium loyalty programs as a part of their overall marketing strategies.
A 2020 McKinsey survey on loyalty programs found that members of premium loyalty programs are 60% more likely to spend more on the brand after subscribing, while free loyalty programs only increase that likelihood by 30%.
Premium loyalty programs drive higher purchase frequency, basket size, and brand affinity compared to free loyalty programs, according to the McKinsey survey.
Our own 2020 Premium Loyalty Data Study found that 89% of consumers would recommend a retailer to family or friends if the retailer’s premium loyalty program offers valuable benefits.
At the end of the year, you need to quantify the value of your loyalty program in terms of revenue generation.
If it’s not having a positive impact by creating loyal customers that shop more and generate more revenue, you’re likely re-evaluating if it’s worth having.
Loyalty Management Doesn’t Need to Negatively Impact ROI
If you’ve researched your options for outsourcing the creation and management of your loyalty program, you probably know that almost all loyalty solution providers have upfront costs for building their programs.
Those upfront fees put a dent in your ROI before your program even goes to market. The last thing any of us needs after 2020 is more dents.
If you’re in the market for generating revenue by creating loyal customers, you want a positive ROI from the start.
Our loyalty pricing model was created with positive ROI in mind by adding a subscription revenue stream which has a positive impact on your business without upfront costs.
Members of premium loyalty programs enjoy elevated benefits like instant discounts that can be used whenever they shop, faster, free shipping, free giveaways, exclusive deals, surprise rewards, and access to exclusive in-store events.
But you need a way to fund these benefits.
When you add a revenue stream, it allows you to offer an even better experience by having better benefits, which creates elevated engagement and brand advocacy.
So, not only are you getting a positive stream of revenue after launch, you’re also generating more revenue over time with increased AOV and order frequency.
Investing in Your Loyalty Program Has a Domino Effect
If you’re not putting money in upfront and gaining revenue from recurring membership fees, this gives you more funds to continue investing in program benefits and rewarding your loyal members.
Investing in improving the value of your premium loyalty program positively impacts customers.
When customers know they’re getting added value when they shop with their brand, it drives them to purchase more, more frequently, and become brand advocates.
As a result, your brand advocates proudly share their experiences and the benefits of being loyal to your brand and your premium loyalty program.
Keeping your loyalty program fresh and valuable will naturally increase customer LTV.
When members realize that you listen to the wants and needs of your customers and continually improve the rewards and benefits of being a member, they’re likely to remain members longer.
Premium loyalty programs are grounded in data, which makes it possible to continuously optimize and adjust benefits based on the benefits your most loyal customers enjoy.
This includes a mix of both transactional benefits like instant discounts and free shipping with experiential benefits like exclusive in-store experiences. By offering better benefits that are instantly available to customers, premium loyalty programs encourage members to engage regularly.
These impacts on customer loyalty end up increasing purchase revenue, not only this year but for years to come.
Generate Loyalty and Revenue at the Same Time
There doesn’t need to be a trade-off between loyalty and revenue.
You can have both.
Not all providers charge to build and manage loyalty programs and the rewards you give your customers are going to have downstream positive impacts to customer LTV.
If you’re hoping your customers will stay a little longer, give them a reason to stay and spend more by investing in your program.
The customer loyalty domino effect doesn’t always start with negative ROI and, after a year like 2020, it shouldn’t.