5 CONSIDERATIONS FOR YOUR LOYALTY PROGRAM

Financial crises are worrying for the economy, social development, education or anything to do with the whole system. They infect the system and brings indetermination along with it. And it is obvious that buyers tend to shop less when there’s a sign of economic crisis. However they still keep buying-- just in a smarter way.

 

Within the 21st century, we’ve seen the dom-com bubble, mortgage crisis, Icelandic and Irish crisis, 2014 Russian financial crisis. Recently Greek goverment-debt crisis shook the European Union and now we’re asking ourselves how the Chinese stock market crash will affect the global economy in the long run?

 

Therefore brands are also asking “How will we keep selling our products/services if another crisis hits the market?”. When it comes down to selling something, loyalty becomes the center of attention all of a sudden. It is and has been one of the most strategic mechanisms for the companies to increase revenue growth especially during recession. Based on the fact that retaining an existing customer is less expensive than acquiring new customers, brands do realize the importance of loyalty programs during these hard times.

 

 

So, what are brands supposed to understand when the concept ‘loyalty’ is brought forward? In some cases, loyalty might be a misused term. Some still think that customer loyalty is about customers being loyal to them when it should be the other way round, where the brand should be loyal to its best customers by offering the best value that is not generally available to the mass market. Loyalty programs are not sales promotions either – they tend to shape the customer behavior in a long time manner. Their strategical and technological infrastructure need more work and investment, but ROI is a lot higher, whether it’s built for big or small businesses. Attracting a new customer can cost as much as 15 times more than retaining an existing customer according to Terry Gillen’s work. According to another study on SBOs by BIA/Kelsey and Manta, existing customers spend 2/3 more and 61% of SBOs generate  51%+ of their annual revenue from repeat customers rather than new customers. 

 

Altan Bulur / CCO

 

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