Loyalty programs are really important tools for marketing. It can be used in many fields
related to marketing. Online stores, physical stores, and memberships are important ways to use them. It also can be used for manipulation techniques in marketing. Loyalty programs work as a membership to companies. Consumers can have a card or ID number, and with it, customers can get extra benefits. Those systems are really useful for increasing customer satisfaction, bringing in new customers, creating communication with brand and customer, raising loyalty and advocacy, raising retention rates, lowering lead generation and retention costs, higher social media engagements, and higher brand awareness to have more information about customers’ contact numbers, email addresses, preferences, interests, demographics. More customer information can bring more success and better targeting for marketing campaigns.
Loyalty programs can be used in four different ways;
• Paid Loyalty Programs: Customers need to pay to get extra benefits.
• Valued Loyalty Programs: With every purchase, companies make donations to charity.
• Rank Systems: With every purchase, referral, and engagement, customers can get
extra levels from the rank systems. At every level, customers can get different benefits.
• Point-Based Loyalty Programs: With every purchase, engagements customers can
get points and with these points, customers can get products for free.
Loyalty programs can be used differently for marketing processes, such as lead
generation, retention, and loyalty
The first one is useful for the lead generation part. When companies try to find new
customers, they can use loyalty programs. In the advertising or the stores, they can offer extra benefits. For example, “If you subscribe to our loyalty program, you can get an extra product and a 10% discount”. These kinds of offers are beneficial for the next sales and to create communication with new customers, they also bring benefits for the first sale.
The second one is useful for improving the retention rate. For many of the companies,
the lead generation part is expensive. After the first sale, retention has a critical impact on
growth. Many loyalty programs have rank systems to raise retention rates. Ranks systems can have different rules. For example, “With every purchase earn points and use them for the next shopping”. This example is handy for credit cards and flight tickets. Credit cards usually give extra bonuses and flight companies give extra miles with every purchase.
Another example is the level system. Usually, customers have different level ranges.
Their rank is rising with every purchase and it gives extra benefits. Both examples are effective for raising retention rates.
The last one refers to other customers and advocacy. Referral systems usually support
loyalty programs. Customers need to refer a product or service to their friends or family
members after they can get extra benefits. For example, brands can use this like “Bring your friends to our loyalty program and get an extra 10% discount for the next shopping”. Another example is “Bring your friend to our loyalty program and earn 1000 points to your loyalty ID”.
Still, this is an effective method for building relationships with customers, raising revenues, and creating advocacy. That's why, in 2024 still many successful brands follow this method for their brand.
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