Loyalty programs are versatile in that they are one of the best retention tools and can be excellent tools for acquiring new customers. Yes, it is an established point in the e-commerce world that existing repeat customers are 130% more valuable. However, it is also vital that businesses have a good influx of new buyers because these are the same people who can become brand advocates over time.
Getting new customers is not as easy. Companies often resort to intense methods such as running ads, creating content, and engaging in all forms of vigorous marketing techniques in hopes of attracting new customers. But you can achieve much more when you apply loyalty programs to every stage of the customer lifecycle. Loyalty programs can lower customer acquisition costs and marketing expenses, boost the lifetime value of customers, and retain existing customers while strengthening their connection to your brand.
This article will discuss how brands can use loyalty programs effectively to drive customer acquisition in a business.
How loyalty programs improve acquisition
Several great things can take place when a customer comes back to repeat a purchase in your store. Not only is such a person convinced about your brand and likely to make further repeat purchases, but that person is more willing to recommend you to their loved ones. This is where businesses can leverage to increase their reach in the market. In addition, your repeat customers are your greatest asset when it comes to acquiring new customers.
Another critical point retailers need to remember is that shoppers seek out brands that offer loyalty programs. Integrating a loyalty program in your store will attract these types of shoppers to do business with you. There are value-driven decision-makers and experienced seekers. As a business, you should create a rewards program with these shoppers as the target.
Value-driven decision-makers are the shoppers who want to optimize the value of their purchases. It should not be confused with shoppers who are price sensitive. Price-sensitive shoppers are more concerned about getting the lowest price for their purchases, whereas value-driven shoppers want to maximize the value of the purchases they make. A brand that promotes a loyalty program will attract value-driven shoppers because earning points on their current and future purchases means maximizing the value of the items they buy.
Experience seekers are shoppers that get interested in a brand, not just for the products they offer. They are the ones that seek to be part of a community. They are not just concerned about placing orders but tend to form long-standing relationships with the brands they transact business with. These types of shoppers are usually attracted to loyalty programs that use the VIP/tier system.
Loyalty programs can be excellent for new customer acquisition because they set brands apart. For instance, if two stores offer similarly priced products, but one rewards points while the other does not, buyers will certainly order from the store that gives them more value. Thus, the availability of a rewards program can influence a good section of shoppers’ purchasing decisions. Therefore, setting up a loyalty program in your store can be the main reason a buyer may choose your brand over a competitor’s.
Loyalty rewards that attract new customers
Welcome rewards
The primary goal of such an offer is to make new customers feel appreciated for joining the community surrounding a particular brand. Welcome rewards are excellent at getting new customers to complete their first purchase. These rewards don’t have to be high-value items. They could take the form of reward points, unique gifts, credit, discounts, free shipping, or a free item specially made for newcomers. As we can deduce from the psychology behind loyalty programs, people are motivated to pursue a goal when they have made some form of progress towards it. In the same vein, rewarding a customer immediately if they join your program or engage with your brand will most likely result in them sticking around.
For instance, if a rule in your loyalty program states that members can earn the first VIP tier status if they accumulate 100 points, it will be a great idea to offer new members 25 points right after their first purchase. It will heighten their motivation to reach that 100-point target. If they are yet to purchase from your store, this knowledge should push them to buy so they can get their free 25 points and earn more benefits as a VIP member faster.
Welcome Rewards should never be hidden from plain sight. The goal is to market them to new visitors; hence they should be featured prominently on your website and loyalty program landing page. Store owners need to bear in mind that whatever benefit they attach to a welcome offer should always move customers towards making their first purchase.
Referral Rewards
Research shows that at least 20 to 50% of purchasing decisions are made due to word-of-mouth testimonies. People would generally find it easier to patronize a product or join a loyalty program if a friend or close relation recommends it to them. There is no doubt that referral programs can be a significant source for brands to acquire new customers if appropriately utilized. Hence, brands need to be highly innovative when it comes to this field.
Referral programs can come in different forms depending on who is referring, how they go about the referral, and their rewards. Let’s delve into some innovative ways brands can use loyalty program referral rewards to gain new customers.
Customer referrals
These are by far the most popular and involve incentivizing your existing customers for referring family and friends to your business. Customer referrals are crucial to your business because they can double, triple, or multiply your customer base drastically. Imagine if each of your customers successfully refers one person to your business every month. That would result in a tremendous boost in traffic, sales, and revenue. Studies have also revealed that customers referred by existing customers typically have a 16% higher lifetime value and spend about 13.2% more than customers who did not join through a referral.
In rewarding customers, you could offer both the existing customer and new members a 10% discount once they join your loyalty program or make their first purchase. In addition, it will urge both parties to continue the cycle of recommending your brand to more people.
Incremental Perks
Another innovative way to incentivize referrals and attract even more customers is to provide incremental benefits. For example, you can offer more rewards, points, or bonuses to existing customers when referring the 3rd, 10th or 20th person to your brand. Once they know they will receive higher rewards for referring more new people, they will be motivated to recommend your brand to their circle of friends.
Another great way to acquire new customers through a loyalty program is to reward members for interacting with your social media channels. Offering them points for sharing your store, a post, or following your pages will not only increase their engagement but increase your reach to potential customers. When existing members share your store link, for instance, there is a possibility that you can get more credible eyeballs and prospective customers than paying for an expensive ad.
Review Rewards
Much like referrals, reviews play a significant role in converting new customers. Before deciding to engage with a brand or purchase a product, most online consumers would read reviews about them. Displaying positive reviews from real users can be one of the most incredible ways to earn the trust of a new customer. However, many customers either forget to leave reviews or do not see it as practical action. Business owners can change the narrative by simply providing an incentive to customers to leave reviews. By rewarding reviews, you can increase the conversion rate of your product and easily convince customers to complete their purchase.
Wrapping Up
Based on the factors we have discussed so far, we can safely conclude that every single business needs to acquire new customers to survive. However, solely relying on most traditional acquisition methods can be harmful rather than helpful to your business. In recent times, conventional acquisition methods like paid online ads and reaching out to prospects are getting more expensive, difficult to execute, and not delivering the expected results.
This is the motive behind our view that brands can use loyalty programs as a cost-effective tool to acquire new customers in their business while ensuring that those customers stick around much longer. Most of the loyalty program tactics you can implement through Beans Loyalty are excellent for acquisition if you focus on building more robust and lasting relationships with your customers. They become even more effective and produce higher ROI when you nurture the relationship by providing more incentives throughout the customer journey.
