Many organizations focus most of their marketing efforts and budgets on acquiring new customers. In the process, they fail to nurture their existing customers leaving many of them to shop for products and services elsewhere.Research consistently shows that boosting customer retention and selling to current customers can boost an organization’s bottom line.According to experts, the chances of selling to an existing customer are between 60% and 70%. But the probability of getting a new customer to buy products is just 5% to 20%. Moreover, consider that:
- Repeat customers spend an average of31% more than first-time customers.
- A 5% increase in customer retention produces more than a25% increase in profit.
- Customers who feel an emotional connection to a brand have a306% higher lifetime value (LTV), stay with a brand for an average of 5.1 years to 3.4 years, and recommend brands nearly twice as much.
One highly effective way to boost retention is with a customer loyalty program.
What is a Customer Loyalty Program?
Wikipedia defines a loyalty program as “a marketing strategy designed to encourage customers to continue to shop at or use the services of a business associated with the program.” There are many different types of customer loyalty programs. For example, earning points on each purchase and exchanging them at a later date. Or offering discounts for spending a certain amount of money.
