Why Loyalty matters
Sep 20, 2023
Super Thinking
In today’s hyper-competitive business landscape, customer loyalty has become an essential factor for sustainable success. More than 90% of companies now have some form of loyalty programme, but why? What is the fuss about?
A study by Bond Brand Loyalty revealed that loyalty programme members are 70% more likely to actively recommend a brand to others. But it’s not just word-of-mouth, it translates to business benefits too.Customers who are enrolled in loyalty programs spend, on average, 12-18% more per transaction compared to non-loyalty program members (Source : Accenture).
Going forward, businesses will need to adapt and evolve their customer loyalty strategies to meet changing consumer expectations. One effective approach involves leveraging cash rewards, which have proven to be a powerful incentive for customer loyalty.
Around 53% of consumers join loyalty programs to earn rewards for future purchases (Bond Brand Loyalty), so these types of programmes can attract new customers to the business, as well as locking in those who have already become advocates.
Evolving Customer Expectations:
Customer expectations have shifted dramatically in recent years, driven by advancements in technology and changing market dynamics. It is fair to say that expectations of what businesses can deliver in terms of added value, have grown throughout the years.Today's customers look for personalised experiences, seamless interactions across multiple channels, and tangible benefits for their loyalty. So businesses need to embrace these changes and offer compelling loyalty programs that provide real value, because customers who are enrolled in loyalty programmes spend on average 37% more per year than non-members. (Source: Annex Cloud)
The Power of Cash Rewards:
Cash rewards have emerged as a potent tool to incentivise customer loyalty. Offering cash back or cash-equivalent rewards provides customers with tangible benefits that can be easily understood and used. According to a study by Bond Brand Loyalty, 66% of customers prefer cash rewards over other loyalty programme incentives, such as discounts or merchandise.In fact, global research shows that around 53% of consumers join loyalty programmes just to earn rewards for future purchases (Bond Brand Loyalty). Moreover, the flexibility of cash rewards allows businesses to cater to diverse customer preferences and demographics, which other programmes may not be able to do..
In addition, the 2021 Loyalty Barometer Report from RevTrax reveals that 69% of consumers consider cash-back offers as the most valuable type of reward. The same report highlights that cash rewards influence 67% of consumers to choose one brand over another, highlighting their impact on customer decision-making.
So given cash rewards are a powerful tool, how are brands making it work for them?
Starbucks
When members make purchases at Starbucks, they earn “stars,” which can be redeemed for free drinks, food, or drink upgrades. Members can earn further stars by buying on specific days, or completing in-app tasks.
For this loyalty programme, members have a choice to spend points as soon as they can, or save them up for bigger rewards. Because it’s so seamlessly integrated into the Starbucks mobile app, the programme also rewards app use, so it’s a win-win. It encourages app usage, plus service rewards as members can pick up their drinks in-store, so negates the need for waiting! And members must pay using a Starbucks card or the app, so the programme encourages putting aside money for Starbucks in advance. How’s that for encouraging loyalty?!
Amazon
A loyalty programme list wouldn’t be complete without Amazon Prime! Whilst it may not sit in a traditional “pay-to-play” venture, the annual fee model that Prime uses still counts as a loyalty programme type. Latest figures show a whopping 200+ million members across 23 countries are willing to pay an extra fee a year for free shipping and exclusive access to all the perks Prime has to offer. And this often makes the difference in swaying their future purchases – it leads customers to pick Amazon over top physical retailers, especially on ‘Prime’ days.
Whilst an annual fee might not be sustainable for most businesses, a flat lifetime fee can be effective at driving the future of a loyalty programme.
Famous Footwear
This is a brilliant example of a cash reward loyalty programme delivering instant gratification, alongside easily attainable milestone missions. Customers receive cashback rewards when they make purchases and can then use them to reduce order costs. That’s not all though - members can also get free shipping, birthday gifts and other rewards linked to early notifications & promotions.
Then, if customers spend over $200 a year, they upgrade to the second tier which unlocks even more rewards. It must be working as they now have over 22 million members!
It is clear that offering a robust loyalty program sets businesses apart from competitors and provides a compelling reason for customers to choose them over alternatives; 81% of consumers say loyalty programmes make them more likely to continue doing business with a brand. (Source: Colloquy). So what are you waiting for - get that cash reward loyalty programme going now!
Tracey Stern, Brand Marketing
