Benefits of having a digital customer loyalty program

Loyalty programs are nothing new, as early as the 19th century, merchants used them to retain their customers. But today, digital loyalty programs offer greater opportunities: social networks, smartphone apps, but also smart labels can help companies to expand and improve the customer experience.

But why are customer experience and customer loyalty so important? Well, because it is 5-25 times more expensive to acquire a new customer than it is to retain an existing one.

So, let's explore how digital loyalty programs work and what are the benefits!

What is a digital customer loyalty program?

A digital customer loyalty program is a system that encourages customers to continue buying a company’s products or services, by providing rewards.

These rewards can be in the form of discounts, freebies, exclusive offers, and much more.

The ultimate goal of a loyalty program is to create long-term relationships with customers and turn them into brand advocates.

How to set up a customer loyalty program

There are many different ways to set up a customer loyalty program. Everything depends on the specific needs of your business. However, some common features of digital customer loyalty programs are:

• Points systems: Customers earn points for every purchase they make. These points can then be redeemed for rewards such as discounts, freebies, or exclusive offers
• Tier systems: Customers are placed into different tiers based on their spending habits. The higher the tier, the more benefits and rewards the customer receives
• Social media integration: Customers can share their rewards and achievements with their friends and followers on social media. This helps to create a sense of community and loyalty among customers
• Gamification: Customers can earn points or badges by completing certain tasks or challenges. This helps to keep customers engaged with the program

Companies can rely on mobile apps, or simply take advantage of push notifications to interact regularly with the consumer. Moreover, they can use the products themselves as access points to loyalty programs: through smart labels, customers can register for the program and access special contents. These connected products  give the opportunity to reach all customers, regardless of the sales channel, and add them to the company’s CRM, thus, making easier to manage the relationship with them.

Benefits of a loyalty program

There are many benefits of having a digital customer loyalty program. Here are a few.

• Increased customer retention
  This is the ultimate goal of a loyalty program, that is, helping to keep customers coming back to your business. The more they come back the higher the possibility to incentivize new purchases.
   
• Higher spending
  Customers who are enrolled in a loyalty program tend to spend more money than those who are not. This is because loyalty programs provide incentives for customers to spend more in order to earn more rewards.
• Increased customer lifetime value
  A loyal customer is worth much more than a one-time customer. In fact, loyal customers tend to stick around for longer and make repeat purchases. According to studies, the average customer lifetime value of a loyalty program member is two to five times higher than that of a non-member.
   
• Data collection
  A loyalty program can help you collect valuable data about your customers’ spending habits and preferences. In fact, through games and questionnaires, you can encourage consumers to tell something about themselves. This way you can identify needs and desires. But you can even test their reactions to potential new services or products. All this quickly, accurately, and economically.
   
• Personalized customer experience
  Thanks to the collection of data, a digital loyalty program can help to improve the customer experience by providing a more personalized and tailored experience.
  First of all, you can talk to customers directly through their smartphone, calling them by their name. Then, you can offer them only those content, games, and offers relevant to them, avoiding the boredom of unwanted messages or proposals that are not in line with their wishes.
   
• Improved customer service
  A loyalty program can help you improve your customer service by providing a way for customers to give feedbacks and report problems. In addition, you can use the data collected to identify areas where your customer service needs improvement.
   
• Reduced marketing costs
  A loyalty program can help you save on marketing costs by providing a way to target your most valuable customers with personalized messages and offers. In addition, loyalty programs can help you create brand ambassadors who will promote your business to their friends and followers.
   
• Helps to increase customer acquisition
  A loyalty program can help you attract new customers by offering rewards for referrals. In addition, a well-designed loyalty program can be a powerful marketing tool that can help you stand out from your competitors.
   
• It's an eco-friendly solution
  Consumers are asking companies to be sustainable, and a digital loyalty program does not require the use of paper, plastic, or other materials that have an environmental impact.
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• Helps your brand to stay 'front of mind'
  A nice thing about digital loyalty programs is that you can take advantage of a thousand opportunities to interact with the customer. In fact, there are not only special offers, discounts, vouchers or main competitions. You can set up small birthday rewards, or side games. The important thing is that they are activities that can excite your customers and keep their attention towards your brand high. Every day there can be a good opportunity to engage users.
   
• It is what people expect
  Especially if your company deals with Millennials and Gen Z: the use of digital technologies and a more engaging customer experience are almost taken for granted. They expect companies to be technologically up to date and to be in the same virtual places as they are.

According to a 2018 CodeBroker survey of more than 440 millennials involved in loyalty programs, 97% said they want to engage with loyalty programs as long as they can access rewards information directly on their smartphones.
 

Find out how Certilogo can help your company to improve the digital customer engagement.