The Importance of Loyalty Programs, the Benefits of Brands Offering Loyalty Programs, and Why Loyalty Programs Should Be Enhanced as a Customer Retention Strategy

Summary

This essay sheds light on the importance of loyalty programs and elucidates the benefits of brands offering loyalty programs. Moreover, this essay delineates why loyalty programs should be eminently enhanced as an efficacious customer retention strategy.  A new development related to relationship marketing that is likely to emerge as companies strive to be the premium solutions providers is the enhancement of loyalty programs. Today, loyalty programs are leveraged by a copious amount of companies to strengthen the customer’s brand loyalty and to also retain customers as repeat buyers. The importance of loyalty programs goes beyond brands being able to earn more revenue and increase their sales volume. Loyalty programs also allow brands to foster more brand advocates, track customer purchases, make personalized product recommendations to customer based on their purchase history, attract new customers, and directly reach out to customers more frequently via email to market the latest promotions. The benefits of loyalty programs are multitudinous and should not be overlooked for companies adamant about maximizing their long term profitability. The usage of a loyalty program leads to increased revenue since increased customer retention rates culminates in boosting profitability.  Additionally, implementing a loyalty program as a customer retention strategy is typically substantially less expensive than spending marketing dollars to attract new customers (Miller, n.d.). “Acquiring new customers can be 25 percent more expensive than focusing on retaining current customers” (Miller). Companies can also utilize the purchasing history of loyalty program enrollees to have their product recommendation algorithms recommend products they may be interest in purchasing in the future. Emails of product recommendations can be sent directly to the customer’s email address. Brands can also leverage their “loyalty program to promote sales, special events, and showcase new products” (Miller).

©2019 Dr. Harrison Sachs (P)2020 Dr. Harrison Sachs