Since we are all consumers, we can clearly see how most of the brands we deal with have been investing heavily in loyalty programs as a way to say thank you, add value to us, retain our businesses and boost revenues while getting the opportunity to analyze our preferences and behaviors as consumers.
As for brands in the business of play, we can see the trend growing further with both retailers and brands (which are sold at retail level) investing in such programs to keep the business revived. The very popular example is Rewards R Us program implemented by the toy retail giant Toys 'R' Us, which rewards customers with 1 point with every $1 spent in addition to the following benefits:
- Get $5 in “R”Us Rewards with every 125 points you earn
- Enjoy rewards via email or bank your points for future purchases
- Redeem rewards within 60 days
So why are loyalty programs important and how can they support your business whether as a retailer or a brand, here are 6 main reasons that support this strategy:
1. Gain higher market share; whether through retaining current customers or attracting new ones, a rewarding loyalty program entices customers to give you their business rather than directing their purchases towards the competition. Furthermore, new customers are often encouraged to buy from brands which offer them an added value in return especially if competitors are offering similar products, in this case the loyalty program can play a major role in influencing customers’ buying behavior.
2. Rewards customers differently; each customer benefits the business differently, and through analyzing the sales data of customers, business can categorize buyers accordingly and reward them differently based on the value they offer to the business.
3. Analyze consumers’ behaviors and preferences; the beauty of loyalty programs is in supporting businesses not only in gathering customers’ data but also in analyzing their behaviors, likes, dislikes and their preferences hence enhancing the business offerings to suit customers’ preferences.
4. Analyzing the effectiveness of marketing activities; upon analyzing customers and sales' data, businesses understand what means of communications or kind of offers/ products influence customers’ buying behaviors. They can also measure the effectiveness of a marketing campaign through customers’ data.
5. Offers a new platform to communicate with customers; through loyalty program CRM system, businesses can reach their customers directly to communicate latest campaigns, promotions and the launch of new products. Furthermore, communication messages can be customized according to customers’ profiles, many brands now greet consumers on their birthdays and some companies even offer a gift voucher as a simple gesture to make their customers happy.
6. Encourage more purchases hence boosting revenue; once customers start collecting points and they become very close to redeeming a reward, they tend to buy more than if they weren’t a part of an incentive program, thus boosting sales.
What are your thoughts about loyalty program? And why do you think they are important for brands in the business of play?