Is a Rewards Program The Key to Customer Retention?
Did you know it costs five times the amount to acquire a new customer than it does to sell to an existing one? Further, existing customers spend 67% more than new customers!
A recent study found that 77% of people are more likely to stay with a brand if they are part of a loyalty program. With statistics like this, should your accommodation brand be doing more with your loyalty program in order to attract more customers and improve retention rates?
Loyalty or rewards programs are very popular at the moment, with most retailers having their own type of program, and are often at the heart of customer relationship management strategies. Serving as a platform to regularly engage and offer personalised messaging, loyalty programs create a strong repeat customer base, incentivise shopping, increase sales. As the generation known to love tailored offerings and on demand communication, it is no surprise that Millennials are amongst the highest level of users of loyalty programs.
As we move forward into an even more digitally focused era, consumers are demanding innovation. Smartphones are becoming increasingly prevalent, organisations are being forced to innovate and improve their loyalty programs. 97% of millennials said they would actively engage with loyalty programs if they could access their rewards information from their smartphones. As a result, organisations with innovative solutions are gaining competitive advantage.
We have seen a heavy shift towards loyalty apps for consumers, that allow them to input their preferences and receive deals, offers and communications targeted to them. This is particularly relevant within the hotel industry, where a loyalty program can have a significant impact on the guest experience. Demand for such apps are high, with an outstanding 88% of guests wanting an app that allows their stay to be more personalised.
However, mismanagement of the program can have a negative effect on the organisation and be detrimental to the reputation. Businesses who are unable to effectively run their programs or are unable to fulfil their rewards promises will face scrutiny. When establishing a rewards program for your brand, ensure that the infrastructure is there so that it can deliver value to guests without becoming a hinderense.
With proper management, rewards program can really maximise the relationship brands have with their customers, which in turn will produce an increase in long-term sales. The staples of a great rewards program are:
- Keep it simple, utilise a points based system that allows guests to progress up levels or tiers. This is a proven model that encourages engagement and offers transparency to users.
- Be generous, do not build a loyalty program where guests have to work tirelessly to get any kind of reward. This removes any incentive to participate and can generation poor word of mouth.
- Make it digital, in our modern age guests should be able to access these programs from the comfort of their homes, or their rooms.
- Measure success, to ensure that this program is generating a return on investment for your business, measure key metrics such as Repeat Purchase Rate, Redemption Rate and Active Engagement Rate
The best customers are the ones you already have, so ensure that you put in place customer retention measures that deliver continued value and build customer loyalty over time!