How Businesses Create Loyalty Within a Competitive Landscape

Customer loyalty is one of the biggest challenges that businesses face, especially those that operate in a competitive landscape where they could easily lose out the competition. Businesses need to be able to retain customers in order to build a solid base and for growth, but when the consumer is spoilt for choice, it can be hard for a business to keep hold of customers and instead could be losing out to the competition.

Loyalty Programs

There are a handful of strategies that businesses can use to retain customers and promote loyalty. Perhaps the most effective, though, is loyalty programs which can be beneficial for both the business and customer. Essentially, these are programs that incentivize a customer to use the business again, such as a discount on their next order or a free product after 5 purchases.

Benefits of Loyalty Programs

LoyaltyLion state that customer retention costs 5 times less than customer acquisition, so it is clear why businesses want to retain customers as much as possible. In addition to encouraging customers to keep coming back, loyalty programs are also helpful for building stronger relationships with the target customer, increasing customer lifetime value and competing with the bigger brands. When a customer uses the same company regularly, it will build trust and they are more likely to recommend the brand to their network. Forbes state that 90% of consumers are equally or more loyal to brands than they were a year ago, which is unsurprising when you consider that now more than 90% of companies have some kind of loyalty program.

Customer Perks

From a customer viewpoint, loyalty programs are beneficial because you are getting rewarded for using a company that you already know and trust and you can benefit from personalization. According to Forbes, 50% of customers state that their primary reason for joining a loyalty program is to earn rewards on everyday purchases.

Imperative for Success

In a competitive marketplace, loyalty programs are imperative for brands and could make a huge difference to their success. According to Marketing Land, loyalty programs are proven to boost growth with these programs used by business experts as their traditional model to expand a company. On top of this, these programs are a great way to enhance brand reputation and increase sales as well as provide insight into a business's target market. Finally, loyalty programs are not expensive to run and can deliver significant ROI, so they should certainly be considered by any marketers looking to retain customers and compete at a higher level.

Loyalty programs are on the rise and it is no surprise when you see the benefits that they can bring to both a business and consumers. From a business standpoint, loyalty programs can help companies to retain customers in competitive industries and build stronger relationships while a consumer will always benefit from being rewarded for using a company.