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How do customer loyalty programs become successful?

Increasing sales and growing as an organization are part of any company's objectives. It has been known for years that loyal customers represent a significant percentage of all revenue. As a result, more and more companies are focusing on customer loyalty - through customer loyalty programs designed to generate loyal customers. This raises the question: What factors make a customer loyalty program successful in the first place?

To answer this question in one sentence: It is the customers who use customer loyalty programs. It is important to satisfy them and respond precisely to their needs, as this is the only way to ensure the long-term success of a program.

According to the article Global Outlook on Loyalty Programs and what Consumers want, which in turn is based on the Global Sentiment Survey, there are a number of factors that a company must take into account in a loyalty program in order to satisfy users.

What consumers want

One of these factors is flexibility. As you can see from the infographic, 81% of all respondents stated that they would like to earn points in a variety of ways. Whether it's a purchase in the store or in the online store, users don't want to be limited to just one option. The same applies to rewards that customers are entitled to. A broad portfolio of gifts, vouchers and discounts makes consumers happy and, as a result, more loyal.

Source: Global Outlook on Loyalty Programs and what Consumers want

What Consumers want 1

Another factor that satisfies customers is the combination of a customer loyalty program and the smartphone. 67% of all respondents said that an app in combination with mobile payments is an important aspect for them. In addition, more than half of all people would like to have the opportunity to earn additional points by sharing posts and products on social media.

Source: Global Outlook on Loyalty Programs and what Consumers want

What consumers want 2

The third and probably most significant factor identified by the study is the personalization of a customer loyalty program to the customer. Users want to be treated specially and feel that they are important. They are willing to share their information, preferences and habits with the companies they prefer and expect personalized offers and rewards in return. The customer is king and this feeling must always be conveyed.

But what happens if the above factors are neglected?

The answer is simple: customers not only turn away from the customer loyalty program, but also from the company as a whole. More than half of all respondents stated that they had left a customer loyalty program. The main reason given by most was not being understood by the brand. This loss of contact results in more than just a failed customer loyalty program. As can be seen from the graph, 86% of customers spend more money with companies with which they are in close contact. If the wishes of customers are neglected, this results in the following: 63% buy less or not at all from companies with unsatisfactory customer loyalty programs.

Conclusion: How do customer loyalty programs become successful?

Customer loyalty has many facets

In a few words, it can be said that customer loyalty programs alone are not enough to strengthen customer loyalty. To be successful, you need to know your customers inside out and interact with them constantly. Flexibility, the seamless implementation of technology and the communication of values are the keys to success. Do you already have this key in your hand, or are you still standing in front of a locked loyalty door?

Author: Richard Szilagyi, student at the University of Applied Sciences Upper Austria, Global Sales and Marketing

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