Research shows that existing customers are much more valuable than new prospects. The probability of making a sale to an existing customer is 60 to 70%; for a new customer, that likelihood is as low as 5 to 20%.
These numbers illustrate why companies spend big on loyalty programs. They’re hoping that they can invest in their existing clients and increase their retention rates through various methods. The most common include:
- Reward points for every purchase
- Extra discounts on key moments
- Partner discounts
Yet, while these brand loyalty tactics are by far the most popular, 71% of customers now say that discounts alone don’t earn their repeat business. Having a loyalty program is not enough — it’s time to reimagine your company’s loyalty program and invest in an emotional connection with your clients.
Loyalty Program Members vs. Loyal Customers
About 65% of consumers said they switched brands “often” or “very often” in the past 3 months. Brand loyalty is eroding because of supply chain issues and price increases.
Simply having a loyalty program with a high enrollment or receiving consistent sign-ups doesn’t mean your client base will continue to purchase from your business regularly. The average consumer belongs to around 15 loyalty programs but uses less than half of them. When looking at your loyalty program, the number of members means nothing if they are not engaging with you. So if your engagement rate is low, it may be time to move in a different direction with your loyalty program.
What Makes a Loyal Customer?
Customers are loyal to brands for a variety of reasons. Here are the most common:
- Price
- Value
- Quality
- Experience
- Convenience
- Brand connection
Research shows that emotionally connected customers stay with a brand longer. When brands focus on cultivating an emotional connection of belonging with their customers, they can gain customer loyalty.
Why Do Brands Need Emotionally Connected Customers?
Emotionally connected customers are a brand’s best asset. They have an enhanced customer lifetime value (CLTV) up to 306%. They’re also a real advocate for your brand, riding the waves that businesses experience over time. They won’t switch at your first sign of adversity.
“Forrester’s CX Index data has consistently shown that making customers feel appreciated, happy, and valued binds customers to brands. The data further shows that when a company makes customers feel appreciated, 76% indicate they’ll keep their business with the brand, 80% say they will spend more with the brand, and 87% will recommend the brand to friends and family members.”
Final thoughts
Even though having a large number of loyalty program members sounds like a loyal crowd, it’s important to make sure they are indeed there for the long run. Keep an eye on your program’s engagement rate and make sure your brand fosters deeper connections with customers through emotions and not only transactional touchpoints.
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