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Tuesday, December 5, 2023

Why Every Business in India Needs a Loyalty Program?

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Attracting the most relevant customers and retaining them is the most challenging task for businesses. This is why many companies use a powerful tool called a loyalty program. These programs are aimed at encouraging customers to stay loyal by rewarding them for every purchase they make. With these programs and the benefits provided by many brands, the expectations of consumers have risen. They do not just consider the price of the product while purchasing it but also look for the perks and customer services being offered by the brand.

Almost every successful brand is running a loyalty program in India to attract and retain customers, especially online businesses. Research has shown that brands having an effective loyalty program earn 88% more profit (on average) than the ones who do not run any such program. This data shows how impactful a loyalty program can be for a business. If you run a business in India, you must have a loyalty program to stand out in such a competitive market. Let us help you understand why customer loyalty matters and how you can boost it:

Why is Customer Loyalty Important for Every Business?

Several studies have shown that the most loyal customers of a brand are the profitable ones. Acquiring new customers can be up to 25 percent more expensive than retaining existing buyers. Moreover, loyal customers spend around 31% more per transaction than non-loyal ones. As the competition is rising in every market, it has become really challenging for businesses to boost repeat purchases as their customers have a lot of other options in the market.

If you don’t focus on building brand loyalty, you will have to spend a lot on marketing to attract new customers every time. This reduces RoI for businesses as they end up spending a lot on promotions and advertisements. But loyal customers purchase from the brand they love even without seeing any advertisements or getting any offers. And the best way to encourage loyalty in your customers is to run a loyalty program.

There are many benefits of having loyalty programs for your business, such as increased repeat business, improved customer satisfaction, brand awareness, more sales, and higher revenue.
Most Common Examples of Loyalty Programs in India

The following are some most common types of loyalty programs run by businesses in India:

  1. Rewards-Based Loyalty Programs

Under rewards-based loyalty programs, brands offer some sort of loyalty points on every purchase of their customers. These programs work on a simple concept – ‘buy more to earn more rewards.’ The more a customer spends on a brand, the more reward points they earn. The number of points is fixed against a certain amount spent and customers get rewarded accordingly.

For example, suppose a brand offers 20 Reward Points for every spend of Rs. 100. Now, the customers will earn 100 points for spending Rs. 500, 200 points for spending Rs. 1,000, and so on. The monetary value of these loyalty points and the redemption options are also decided by the brand.

Some companies allow their customers to redeem these points only against their own brand’ products. However, other brands offer multiple redemptions, such as gift vouchers from restaurants, products of other non-competitive brands, or discount coupons for their own brand.

If you run a rewards-based loyalty program for your business, you must ensure that the rewards and redemption process is easy to understand for your customers. To make your program effective and convenient, you can create a separate rewards portal where your customers can log in to track and redeem their rewards.

2. Cashback-Based Loyalty Programs

Cashback-based loyalty programs work in a very similar manner to rewards-based programs. In this case, customers earn cashback instead of reward points on every spend. Now, this cashback can either be in monetary form or the form of store credit. If a brand is offering cashback in the monetary form (though this is rare), there is no specific redemption process associated with this as the cashback is directly credited back to the customers’ accounts.

However, in the case of store credit, this cashback can only be used to make future purchases against a particular brand. The ‘Supercoins’ offered by Flipkart are a very good example of cashback or store-credit-based loyalty programs. Flipkart users earn a certain amount of Supercoins on all their purchases and can use these coins against their next purchase (1 Supercoin = Re. 1). Along with Flipkart purchases, customers can use these coins to buy gift vouchers for several other brands.

These programs are very effective in encouraging your customers to keep coming back and purchasing more. To make your program interesting for your customers, you can offer store-specific coins and provide some additional redemption options as well.

3. Tier-Based Loyaalty Programs

Tier-based loyalty programs are the advancement of the above-mentioned rewards-based programs. Under these, customers are promoted to higher tiers as they purchase more and earn more points. The higher tier offers some additional benefits and this is what motivates customers to spend more to get into the next tier.

As soon as a customer makes his/her first purchase, he/she enters the first or the most basic tier of the program. After making a certain number of purchases or earning some hundred/thousand points, they are promoted to the next tier, where they get more reward points on each purchase. The eligibility to get into the next tier and the benefits in each tier are entirely decided by the brand itself.

Tiered loyalty programs aim to offer higher rewards or greater benefits to more loyal customers. Mostly, e-commerce companies and travel industries use these types of loyalty programs. As the customers purchase more, they get better rewards, which boosts customer loyalty and improves their overall experience with your brand. This is how the benefits of having loyalty programs are not just restricted to customer retention, but also provide increased customer satisfaction.

4. Membership-Based Programs

A membership-based program is a less common yet effective way to retain customers. In these programs, brands allow their customers to become members. The eligibility to become members can be different for different brands. For some companies, everyone who signs up is a member. However, for others, there is a monthly or annual fee that the customers need to pay in order to become a member.

After becoming members, customers get some additional benefits, such as early access to sales and new launches, additional discounts, higher rewards, etc. Paid membership programs are a great way to retain customers as they are very less likely to switch to another brand once they pay a fee to become your member. However, it is important to understand your customer base before you decide to create a membership-based loyalty program.

You can even include a free and paid membership plan under your loyalty program. Offer some additional benefits to the paid account holders, but the free membership plan must also include some exciting perks. With this, the fee will not become a barrier for your customers and they will be encouraged to become a member to get some extra benefits.

How To Build an Effective Loyalty Program for Your Business?

To create a successful loyalty program for your business, you need to understand your customer base and identify their interest areas. You can conduct surveys to understand what excites your customers the most and keep the same in mind while building a loyalty program. Also, make sure that the program adds value to your brand as well as your customers. Loyalty programs can be considered successful only when there is a win-win deal for the business as well as the customers.

RewardPort, India’s No. 1 Loyalty program company, can help you strategize and run an effective loyalty program that works for your business. Keeping every detail of your brand and consumers in mind, they come up with the best loyalty solutions to help you achieve your business objectives.

Read other Blogs here : https://www.cofimagazine.com/10518/business/why-your-business-needs-cold-call-management-software/

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