Nowadays, loyalty programs are a commonly widespread practice as their effectiveness and viable advantages have made them a necessity within advanced marketing strategies. They are mainly implemented within enterprises that emphasise the importance of the customer centric approach - since customer relationship management is the core of their philosophy and the profitable outcomes reinforce the reasoning of this path.
Loyalty program benefits
In order to reveal the numerous advantages that come from incorporating customer loyalty programs into marketing activities, we can look at the measurable profits and benefits that make real effects; distinguishing the following categories:
Increase of profitability
The fundamental and likely factor is that the implementation of loyalty programs directly results in a rise in sales which automatically boosts revenue. One reason for the increase is that loyalty programs are designed to serve as an influence over customer retention. Since research shows that on average 20% of loyal customers are able to generate up to 80% of general revenue and that an increase of the retention by 5% can accelerate the profit by 25% to even 95% , the fact that loyalty concepts support the building of long-standing customer bases is a valuable attribute. Comarch’s vast experience gained through creating over 80 loyalty projects worldwide can serve as proof of the accuracy of these statistics. For instance, after London Heathrow Airport introduced Comarch’s solution, it noted a 60% growth in transactions and a 20% increase in spend per visit (with loyalty program members spending £70 more than non-members).
Although in this context companies should focus on the perspective aspect of customer relation - customer lifetime value - these schemes simultaneously tend to draw in new customers by offering appealing incentives, which is also a valuable point.
The financial success is undoubtedly the main business goal, although we need to keep in mind that it is a consequence of several other loyalty program benefits.
Access to the information
Through regular operations made by the customer (making purchases, redeeming points, choosing rewards and during other typical member activities) they generate a large amount of data, which can serve as a basis for priceless insight into their preferences and habits. By analysing the behavioural patterns of their decisions, preferred incentives, frequency structure and other vital elements, companies can gain vast knowledge about their members. Using the acquired information the overall marketing strategy can be adjusted based on the dominating trends, and offers can then be improved with a remarkable market differentiator - personalisation. Gathered data can be utilised to group customers with comparable preferences and enable smooth and suitable customisation of the offers as a result of this segmentation. Catering for particular customer needs and keeping them in mind through the marketing process allows for specific targeting, and maximises the precision of the entire procedure. It automatically translates into the growth of customer interest and satisfaction.
Channel of communication
Another essential advantage of customer loyalty programs is the fact that they enable direct contact with customers. This is especially valuable in the highly interconnected world, where omnichannel communication is the one of the main supports of customer service within many businesses. Research shows that 34% of marketers manage at least 2 or 3 platforms, while 7% make sure to keep up with 10-20 channels . These statistics show that this advanced approach to customer connection is necessary in order to keep up with competition. Loyalty programs maintain this relationship in a seamless manner by making sure that all customer needs concerning their point status, rewards options, redeeming possibilities, available offers or other concerns are effortlessly accessible, as well as granting a direct medium for the marketing content. Apart from optimising procedures and accelerating time to market, loyalty programs enhance the overall functioning of the entire marketing team cooperation. Furthermore, considering the fact that modern loyalty mechanisms are often enriched with the location- based services supported by the Internet of Things technology (IoT) with the use of beacons, they can reach program members with a simpler method. In this case, messages are not just personalised in terms of content, but are highly relevant to the user and are delivered at an accurate time and place, thus having a more powerful impact and being more forceful in provoking desired customer behaviour. The real-time aspect and the fact that the exclusive notifications consecutively react to users actions enhance the customer experience.
Evoking positive emotion
Finally, these programs play an indispensable role in the complex and usually time-consuming operation of building a solid and meaningful relationship with the customer. Multichannel communication, offer customisation and relevant contact all make the relationship much more personal, pleasant and create a positive environment to form an attachment. This influence is clearly visible when the program is accompanied with an engagement and competition component; it automatically creates entertainment and instantly evokes positive emotions derived from the human feeling toward rivalry. The addition of the interactive social community and digital rewards maximises the attractiveness and leads to an authentic commitment. As a result of these processes, the company becomes much more approachable, and through the personalised angle the customer feels appreciated and the connection forms naturally. Moreover, this unique bond can easily translate into an upgrade of the brand image, since loyal customers often become advocates whose opinion can be sometimes more persuasive than the conventional practices.
Loyalty programs are an extremely influential marketing strategy with an abundance of advantages. To fully utilise the potential of loyalty programs’ benefits, they should be designed by professionals with broad expertise. Comarch, as an internationally renowned customer relationship management specialist, is a perfect advisor and a reliable business partner for cooperation in this field.
For more information about loyalty management solutions and their advantages click here: comarch.com/trade-and-services/loyalty-marketing/loyalty-management/
 Source: Gartner
 Source: http://hbswk.hbs.edu/archive/1590.html
 Source: http://venturebeat.com/2016/06/29/omnichannel-done-right-4-ways-to-keep-the-communication-in-marketing-communications/