It’s no secret, a customer loyalty program is The New Business Imperative. Businesses all over the country are bringing loyalty programs into their marketing mix and experiencing the benefits firsthand. Many businesses are interested in the idea but haven’t pulled the trigger yet. Waiting, however, is actually a bad idea.
You might not realize it, but if you don’t have a customer loyalty program you are missing out on profits.
Loyal customers spend more
Its a fact, your happiest, long-standing customers spend more at your business than new customers do. On average, a loyal customer will buy from their favourite businesses 90% more often and spend 60% more per visit. This is one very important reason to keep your customers happy and reward them for their loyalty.
Repeat customers cost less to acquire
As you know, advertising can be expensive. Even the best ad campaigns that bring in new customers might not get them to come back. Many companies spend 80% of their marketing budget to gain new customers. However, for every 1% of shoppers who become repeat customers, revenue will increase by about 10%. In fact, new customers can cost anywhere from five to 25 times more than keeping an existing one.
Loyalty programs increase profits through customer retention
According to Bain and Co, increasing customer retention by 5% increases profits by 25% to 95%. Another study from Deloitte showed that retailers with a loyalty program are 88% more profitable than competitors that don’t have one.
You might be wondering, what is the value of retaining a customer? Customer lifetime value (CLV) is a projection of the profit that comes from the entire relationship with a customer. For example, an average person will buy an average of seven vehicles during their lifetime. If a vehicle sells for $30,000, with additional upgrades, service and maintenance, this customer could spend closer to $45,000 per vehicle. A customer buying seven vehicles in their lifetime would result in a CLV of $315,000.
As you can see, building your loyal customer base is key to growing annual revenue. With a customer loyalty program, your customers will come back again and again, creating a source of revenue that costs less.
If you want to get your business noticed and increase your profits, our team can help. Find out how becoming a Partner in the AIR MILES Reward Program could be your plan for success.
Our team of loyalty experts is here to help. Contact us to find out how you can get started today!