Benefits of Loyalty Programs: Boost Customer Engagement & ROI

Companies are adopting customer loyalty programs as an important part of improving their businesses and enhancing customer engagement. Many businesses, ranging from hotels to pharmacies, are organizing a lot of loyalty programs. Today, businesses across all industries realize the importance of customer loyalty and have started investing in it. But, small-scale businessmen feel that benefits of customer loyalty programs need a lot of monetary and time investment and they may not result in expected Return on Investment (ROI).

Types of Loyalty Programs

Loyalty programs can be of two types: organized and unorganized.

Organized Loyalty Programs: Organized loyalty programs are focused programs implemented with the help of certain tools and platforms that capture customer data, manage the rewards, and provide valuable insights. Examples include membership cards offered by pharmacies and member-exclusive discounts and benefits. An e-commerce site offering a plus membership with no delivery charges and quick support services to its plus members is another example.

Unorganized Loyalty Programs: Unorganized loyalty programs are carried out without the help of any tools and hence may not provide optimal results. Examples include a tea shop preparing special tea for frequent customers and offering free home delivery, or a street vendor offering extra goodies such as carrots or curry leaves to frequent customers at no extra cost.

Benefits of Loyalty Programs

There are many loyalty programs that companies adopt to increase customer retention and engagement. By the above examples, it is evident that loyalty programs do not always need a lot of time and investment but can yield good results and ROI in the long run.

Organized Loyalty Programs: With organized loyalty programs, one can plan ahead on how much investment and time is needed. These programs can easily be automated using various tools, and data insights can be easily obtained. This allows businesses to make informed, data-driven decisions to enhance customer engagement and retention.

Unorganized Loyalty Programs: Unorganized loyalty programs have a few downsides:

• Biased actions are one of the biggest threats to unorganized loyalty programs. Business owners may sometimes forget to look after a few loyal customers due to the absence of a defined strategy, leading to discrepancies between different customers.
• There is very little or almost no scope for automation.
• No insights are obtained, and therefore, no data-driven decisions can be made.

Conclusion

Loyalty programs, whether organized or unorganized, can greatly benefit businesses by boosting customer engagement and retention. While organized programs offer more structure and insights, unorganized programs can still provide value with less investment. Understanding the benefits of loyalty programs can help businesses decide the best approach to enhance their customer relationships and achieve a higher ROI.