Loyalty program - what is it, what advantages does it have and how to organize it?

An entrepreneur, in order to maintain an adequate level of consumer engagement and constantly work to increase the value of the average shopping cart, must constantly work on marketing solutions. Winning new customers and keeping old ones is this basic and constant task of companies in the retail and manufacturing industries. Various  types of promotional activitiesare used for this purpose . One of the more effective in the context of the most important and loyal to the company customers is the organization of loyalty program. Read what it is, to whom it is dedicated and how to make it!

What is a loyalty program?

Loyalty programs are long-term marketing activities aimed at building or strengthening relationships with customers and rewarding those who are, from the company's perspective, the best - the average value of their shopping cart is the highest or they most often buy products of strategic sales importance. The advantage of a corporate loyalty program over other forms of advertising and marketing is the low outlay required for the action to start producing the expected results. Examples of loyalty programs show that this form of building customer relationships must be used under certain circumstances. It's hard to imagine loyalty when it comes to products or services that have just entered the market. So first you need to accumulate trust capital, which can then only be turned into consumer commitment.

What does a loyalty program provide?

The loyalty system is a classic "win-win" situation. On the one hand, there is the customer who, for example, collects points on a customer card to later be able to exchange them for valuable rewards. He is encouraged by various promotions and combining purchases to multiply his point gain. On the other hand, there is the store, which, thanks to the introduction of loyalty program for  customers, becomes even more emotionally connected with the regular ones. In addition, this is also a real opportunity to increase the value of the average shopping cart. The customer, encouraged by the multiplication of points, may be more willing to select additional products. All this to earn more points, which he will later exchange for more attractive prizes. On a larger scale, various loyalty programs have a positive impact not only on financial issues, but also on recognition and positive associations associated with the store. Customers involved in a relationship with a store are simply more likely to return to it. Thus, it can be said that the benefits of introducing a loyalty program occur for both the customer/consumer and the entity organizing this type of engaged marketing. Loyalty programs are year-round, not subject to seasonality. However, the holidays are an opportunity to strengthen the relationship by adding more occasional point bonuses. Any engaged customer is sure to take great advantage of them.

How to organize a loyalty program?

From a purely technical perspective, it doesn't require much. An important part of the whole loyalty system is certainly already the physical card itself, used to collect reward points for purchases. Some investment is also needed to create and adapt a suitable website and mobile application. All this is done to meet customer expectations and at the same time make the very process of earning and registering points as easy as possible. A customer who has left a physical card at home can de facto always have it with them in the form of its electronic version in the app. This will certainly make it easier to run such a loyalty program and, at the same time, will be a nod to younger people who are no strangers to technological innovations. The organization of a loyalty program must, of course, be preceded by adequate research into the level of customer involvement, but also by appropriate advertising. It is worthwhile to involve multiple channels to reach the customer at once, to make sure that the information on this kind of promotional action is not only clear, but also fixed by the consumer. All in a clear, attractive form that encourages participation. When communicating the program, we must remember to be very clear about the rules and principles, as well as to remind the undoubted benefits of joining the action.

Is it worth it to organize customer loyalty programs?

Studies show that up to half of Poles are actively involved in some kind of loyalty action, most often related to having a loyalty card in a store. This shows the huge potential of such marketing solutions. They work well in both smaller, medium and large stores. It is clear that large retail chains can afford to organize customer loyalty programs on a large scale, but owners of smaller stores should also pay attention to this type of consumer activation. By doing so, they will build positive relationships with customers and, at the same time, most likely also significantly increase their sales. The positive resonance of a loyalty program can also reach new customers, who, encouraged by the rewards, may even change their shopping habits in favor of a store that simply offers bonuses for purchases. In addition, various combinations of point bonuses involving increasing the number of points earned by purchasing not one, but two of the same item clearly have an impact on increasing the value of the average shopping cart - the customer will leave more money in the store. The purchase bonus should be subject to most of the products in the store's assortment, but those of special strategic importance can be additionally positioned as extremely attractive from the perspective of earning more points. Loyalty programs in marketing are one of the more frequently organized promotional actions. The benefits from them can many times exceed the expenses that need to be incurred in their organization. Loyalty programs in Poland is a very popular form of engaging in a relationship with customers. It is used successfully by the vast majority of large retail chains, and smaller market players are increasingly turning to this form of promotion.