Or maybe there is no point in inventing anything?
Posted: Wed Jan 22, 2025 6:32 am
Every customer is a priori a participant in some loyalty program. They have literally taken over the world. Companies are trying to stimulate their customers en masse by launching another system. Of course, this makes some economic sense.
Rosetta Consulting's research has confirmed that loyal customers are 90% more likely to make transactions and spend two to three times more money than those who are not members of the program.
Don't think that Amazon is throwing money away by investing billions of dollars in stocks for its customers. Today, the world is ruled by the buyer, so the entire sales strategy is based on a high el-salvador mobile phone numbers database level of customer satisfaction.
Regular customers are the company's main source of income.
Back at the beginning of the 21st century, studies conducted yielded stunning results: with an increase in customer loyalty of just 5%, a company’s profits grow by 25–95%!
If you want to grow your business, launch a loyalty program. This investment will have a significant impact on the brand's attractiveness, which will be even stronger than the cost of the product and its perceived value. Loyal customers attract many more new people than marketing solutions, which allows the company to save on these costs.
Or maybe there is no point in inventing anything
Source: Pla2na / shutterstock.com
But not everything is so rosy. Boston Consulting Group notes in its research that such a system does not always pay for itself. It is calculated that to compensate for the costs of stimulating and managing the program in the amount of only 3% of the company's income, the level of sales must increase by 10%.
All over the world, attracting customers with bonuses and discounts is becoming less and less effective, and there are reasons for this.
Increase in the number of loyalty programs . The growth curve of the number of customer incentive systems is constantly directed upward. Even special wallets for storing cards no longer accommodate them all, some had to be transferred to mobile applications. But there are no fewer of them because of this.
According to statistics, there are 29 loyalty programs per American buyer, of which no more than 12 are actively used. The situation is approximately the same in Russia. According to RBC Research, about 58% of loyalty cards are idle.
Decrease in the activity of participants. It is clear that with such a number of software products, the total number of participants is each time diluted by newly appeared ones, and the level of involvement is constantly decreasing. How to attract a client if there are the same discount and bonus systems around him, and only the design of the card changes?
A participation reward may save the situation, but without reducing the profitability of the program, it is impossible to increase the attractiveness of the prize.
Adding fuel to the fire was a McKinsey study that looked at the effectiveness of incentive schemes and included 55 of the world's largest retailers. The results showed that revenue growth was virtually the same for all of them, regardless of whether they implemented similar schemes for consumers or not.
So what are loyalty programs – effective investments or a waste of company funds?
Both. These are two sides of the same coin. Those companies that skillfully use this tool for building relationships with clients achieve high results. But if we take the "average temperature in the hospital", then the effect of implementing the systems does not meet expectations. And it is not about the quality of the tool, but about whose hands it ends up in. As is known, "a bad dancer can't do anything." So the main reasons for losing clients are the low level of professionalism in the implementation and subsequent management of the loyalty program.
Rosetta Consulting's research has confirmed that loyal customers are 90% more likely to make transactions and spend two to three times more money than those who are not members of the program.
Don't think that Amazon is throwing money away by investing billions of dollars in stocks for its customers. Today, the world is ruled by the buyer, so the entire sales strategy is based on a high el-salvador mobile phone numbers database level of customer satisfaction.
Regular customers are the company's main source of income.
Back at the beginning of the 21st century, studies conducted yielded stunning results: with an increase in customer loyalty of just 5%, a company’s profits grow by 25–95%!
If you want to grow your business, launch a loyalty program. This investment will have a significant impact on the brand's attractiveness, which will be even stronger than the cost of the product and its perceived value. Loyal customers attract many more new people than marketing solutions, which allows the company to save on these costs.
Or maybe there is no point in inventing anything
Source: Pla2na / shutterstock.com
But not everything is so rosy. Boston Consulting Group notes in its research that such a system does not always pay for itself. It is calculated that to compensate for the costs of stimulating and managing the program in the amount of only 3% of the company's income, the level of sales must increase by 10%.
All over the world, attracting customers with bonuses and discounts is becoming less and less effective, and there are reasons for this.
Increase in the number of loyalty programs . The growth curve of the number of customer incentive systems is constantly directed upward. Even special wallets for storing cards no longer accommodate them all, some had to be transferred to mobile applications. But there are no fewer of them because of this.
According to statistics, there are 29 loyalty programs per American buyer, of which no more than 12 are actively used. The situation is approximately the same in Russia. According to RBC Research, about 58% of loyalty cards are idle.
Decrease in the activity of participants. It is clear that with such a number of software products, the total number of participants is each time diluted by newly appeared ones, and the level of involvement is constantly decreasing. How to attract a client if there are the same discount and bonus systems around him, and only the design of the card changes?
A participation reward may save the situation, but without reducing the profitability of the program, it is impossible to increase the attractiveness of the prize.
Adding fuel to the fire was a McKinsey study that looked at the effectiveness of incentive schemes and included 55 of the world's largest retailers. The results showed that revenue growth was virtually the same for all of them, regardless of whether they implemented similar schemes for consumers or not.
So what are loyalty programs – effective investments or a waste of company funds?
Both. These are two sides of the same coin. Those companies that skillfully use this tool for building relationships with clients achieve high results. But if we take the "average temperature in the hospital", then the effect of implementing the systems does not meet expectations. And it is not about the quality of the tool, but about whose hands it ends up in. As is known, "a bad dancer can't do anything." So the main reasons for losing clients are the low level of professionalism in the implementation and subsequent management of the loyalty program.