How Loyalty Programs Are Emerging as Effective Marketing Tools

All sorts of industries use loyalty programs to give customers that little extra incentive to bring them back for more

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By Baishali Mukherjee


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Trust and loyalty have always been a part of every human interaction, every transaction for thousands of years. All over the world, people have tightly-knit relationships with not just family and friends, but with the familiar faces of friendly merchants and vendors.

Today, we live in a world where we have almost unlimited options. There are effectively an infinite set of options when you're looking for a gift to buy, some great food to eat, or a nice new coffee shop to hang out in. This is wonderful, but it can also be overwhelming. It's a challenge for consumers to figure out what to buy, and it's a challenge for merchants to stay relevant when they have so much competition.

A big part of how this challenge gets addressed is through word-of-mouth. People listen to opinions of their trusted friends and peers, or review sites. Another big part of it is customer loyalty. Once you've found something that works, it's nice to be able to rely on it. And if there's an added incentive to return, even better!

Loyalty Programmes Persuade Happy Customers to Return

All sorts of industries, from large airlines to small nail salons, use loyalty programmes to give customers that little extra incentive to bring them back for more. According to Dinesh Raju, CEO of CandyBar, a digital loyalty solution, customer loyalty programs are effective ways for merchants to persuade happy customers to return.

"As mobile becomes ubiquitous, next-gen tools like CandyBar allow merchants to run sophisticated loyalty programs without the hassle of printing paper punch cards, or having to download (or get their customers to download) any apps on their devices. These customer loyalty tools give small merchants an enterprise-grade edge that would've been beyond their grasp a few years ago," he added.

Instils Pride in Customers who Identify with the Brand

Loyalty programmes establish an emotional connect between the company and the customer, thus ensuring continuous engagement to create brand loyalty. Building and retaining customer loyalty is a tricky issue in this age of fast-moving information and access to diverse choices. A good loyalty programme typically ensures that a customer identifies herself/himself with the value the brand stands for as also making sure that being a part of the programme is a source of pride for the customer.

Mjunction's clients across loyalty and loyalty-based services span diverse sectors such as steel, cement, paints & chemicals, pharmaceuticals and FMCG. This gives it the necessary edge to understand the market and come up with customized, effective solutions as per clients' needs. The schemes are also tailored to each client's need, thus ensuring shared value.

"The loyalty programmes also make sure that all customer needs pertaining to point status, rewards options, redemption possibilities and available offers are effortlessly accessible. This makes the overall functioning of the entire marketing team easier and makes it a great and effective marketing tool," opined, Vinaya Varma, CEO of mjunction.

Loyalty programmes are fast replacing other conventional marketing methods through a very significant market differentiator, personalisation, and this, Varma believes, shall be the most effective way of creating long-term impact in the minds of customers.

Constant Engagement and Regulating Campaigns are Important

Nilisha Agarwal, Founder & CEO of Brand Affair, feels that loyalty programmes help achieve increased traffic, additional repeat visitors, stronger customer engagement and a thriving return on the loyalty deal.

"No single key exists for a successful loyalty programme. You need to assimilate new technology, data-driven strategy and ongoing fine-tuning and upgrading mechanism. It must be supported with strong reporting facility that links transaction data, customer data, CRM data and campaign-specific data in order to offer a bird's eye view of the programme," she shared.

Loyalty program managers should constantly engage in zeroing in on successes, spotting the less performing areas, amplifying the areas that are working and regulating the campaigns accordingly for better impact.

A Win-win Investment for Both Sides

"Loyalty," says, Sudip Bose, MD and CEO of Assured Digital, "is a win-win investment for both sides." "Brands invest in gratifying their customers, while the latter spend on earning those rewards. It works as an ongoing association creating value outside a point of sale transaction. For long-term business growth, nothing can replace the value of loyalty programs," he added

Even with more and more traffic to the store, it's natural for retailers to want the old customers keep coming back. This is where the loyalty plays its part. Offers and promotions serve as great beginners, but maintaining loyalty memberships and consistently creating value for your customers, will help you in the long run.

However, loyalty programs alone will not guarantee repeat customers. You first need to have an offering that satisfies your customers' needs.
Baishali Mukherjee

Former Freelancer

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