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Loyalty Programs: Creating Loyal Shoppers

Loyalty programs are measured as a success when a consumer visits a store more often (either online or in-store), and purchases more frequently than an average shopper. What is it that encourages a consumer to visit your store more often than another one? More than half of global-loyalty participants (51%) agree that product discounts are the most important part of being a loyalty club member.

In the digital age, it can be hard to stand out and differentiate your business from a competitor, so ensuring that your brand is heard in an extremely noisy marketing environment is the key to success. Once you have your customers, what strategies can be implemented so that they return to you and not your competitor: while your business may have a sale (or something similar), how can you communicate this to your customers? While eDM marketing is one of the best ways to reach out to your audience, how do you know if they are going to read what you send them (the average open rate for an eDM is around 20%). Nearly 75% of loyalty-program participants agree that loyalty programs make them more likely to continue doing business with a company – as well as that they purchase more frequently with that company. One reason for this – they know what they are going to get (or what they are working towards), such as – does your loyalty program offer a percentage off every purchase, do you offer a free product for every X sales, do you receive free express shipping for being a loyalty member? These are all factors that will encourage a consumer to continue shopping with your company and to also tell other people about the offers that your company has.

Based on Nielsen’s survey of 30,000 participants, the top four reasons for consumers being a part of loyalty programs were financial incentives – product discounts (51%), rebates or cashback (45%), free products (33%), free shipping (32%).

Australia is currently a little behind in the ways that our loyalty programs are consumed – we still rely heavily on the ‘scan card in-store’ method and have diversified into the newer methods of loyalty-program usage, such as using a retailers mobile app, using an app that allows us to store multiple rewards cards in one place, and entering a store loyalty program into a digital payment system. On these three methods, Australia is well behind the global average. This presents a huge opportunity for retailers and marketers to begin moving their loyalty-programs online – where communication can be sent more regularly to consumers, and, where a company can offer advertising space within their eDM (or similar). This enables a brand to offer more to their customer by partnering with similar brands (not competitors) to offer more value to their customers while also generating income from the partnership.