Loyalty programs encourage shoppers to return to stores where they frequently make purchases. Some of the incentives may include advanced access to new products, additional discounts or sometimes free merchandise.
Better Customer Communication
A loyalty program offers a direct line to customers, making communication much easier. Aside from announcing new products/services, promoting sales, and the like, a useful item on this list of the pros and cons of loyalty programs is that they facilitate recalls when necessary. It’s possible due to purchase date and the barcode of the recalled items. The recall notice gains more weight and significance, as it is based on the consumer’s actual purchase of the affected good. As against to the store sign or newspaper notice, the chance that this email-borne recall notice will get read by the people is high. Kroger has experienced this.
It attracts new customers
How much have you spent on attracting new customers? Although traditional marketing tactics aren’t obsolete, it’s important to think about what would happen if you took even a small portion of what you spend on the traditional media and put it towards a loyalty program. Instead of putting all your money on getting new customers, you will reap the rewards of keeping your current ones coming back.
It helps to increase sales
Loyalty programs improve customer retention and provide incentives for your customers to buy. If you’re giving your reoccurring customers incentives that are in tune with what they want, you’ll be drawing them in and encouraging them to keep coming back and of course, spending money.
Get Higher Cart Value
As explained in the above point, a company can use collected data to cross-sell and up-sell. It can offer extended warranties after an item is purchased, suggest accessories that go well with the purchased item, and provide discounts on related purchases. Moreover, the loyalty program can also bring relief by increasing demand in slow seasons. Its best example is airline mileage program that is available only on selected flights. Due to less wastage, such targeted promotions are prone to yield more satisfactory results.
Work with another brand to get more exposure for your loyalty program
Once you come up with a loyalty program, you’ll need to find ways to promote it. Otherwise, your customers won’t know it exists. But as you know, marketing can be expensive. That’s why you can partner with another company to increase the exposure of both loyalty programs.