Loyalty card programs have been used for quite some time to encourage repetitive business. The modern business world requires relationships to blossom and flourish for profits to be achieved, so rewarding customers who emphasize a B2C relationship in their lives makes a lot of sense.
Over 60% of U.S. households said that loyalty card programs were important in their shopping decisions.
Loyalty Cards Facts
Loyalty cards help consumers feel like they are getting more real value from every purchase. It’s a lot like the idea of getting 1% cash back on a credit card purchase. There’s a small cost to the business, but it is one that is easily managed. In return, many customers wind up spending more than intended just so they can experience the reward from their loyalty program.
- Customer spending is 46% higher with companies that offer reward card programs.
- Nearly 30% of customers state that they are “extremely likely” to increase the amount of visits to a business if there is a loyalty program involved.
- With loyalty cards, a first-time customer has a 3 in 10 chance of becoming a long-term profitable customer.
- Two-thirds of people who purchase three times at a business with a loyalty card program within a 30 day period will become profitable customers of that business.
- Most companies can increase revenues by nearly 50% while retaining only 5% of their customer base with a loyalty card program.
- 15% of customers are loyal to single retailers, making up to 70% of the total general retail revenues that are annually generated.
- A typical company receives around 65% of its business from existing customers.
- Acquiring new customers is anywhere from five to 25 times more expensive than retaining new ones, depending on your industry.
Loyalty cards can change a business around very quickly. The problem that so many businesses face is that their marketing efforts are driven to attracting new customers. It isn’t the first-time customer that is going to create profitability for a business. It’s the repetitive customers that keep coming back for the supplies that they need. This is why loyalty programs can create such a positive impact on a budget’s bottom line. People are encouraged to visit more and spend more because they’ll receive a tangible reward in doing so. For the consumer, the rewards are more than just financially based. The physical joy of earning a reward helps to spur on more purchases as well.
Loyalty Programs Help Every Business In The World
- 95% of British citizens state that they having actively participated in travel and shopping reward programs that were implemented during times of economic recession.
- 64% of the general population belong to three or more loyalty card programs, while only 4% of people aren’t a member of at least one.
- 32.3% of consumers said that a recession has made their participation in retail rewards programs more important.
- 33% of consumers say that loyalty programs are most important to use when times are tough.
- Participation in rewards and loyalty programs rose by 19% across the board since 2007.
- Women [62%] are more likely to join a store-based rewards program than men [54%] if presented with a first-time loyalty card offer.
- 72% of women belong to 3 or more loyalty card programs, while only 51% of men say that they are.
- About 75% of consumers said the economy had a positive or neutral influence on their decision to join a loyalty program.
- 44% of consumers who have a loyalty card will spend at least $1,000 on purchases at that retail location in the next 12 months.
Loyalty cards are all about the value that can be provided. Consumers focus more on the real value of a product than the perceived value of it when economic times are tough. That’s why these programs are so effective. They show consumers that there is more tangible value and the consumer is fooled into believing that they can get more by spending more on what they may want or need. This helps the business out and the consumer feels like they are helped as well. The reality may just be, however, that the consumer is spending more than they should be because of their economic circumstances and that could create future problems for a society.
Not All Loyalty Cards Are Finding Success
- Travel industry loyalty rewards programs have seen a 31.2% decline in active participation since 2007.
- There are 422 million financial services loyalty card memberships in the United States – more than the total population of the country.
- Only 23% of boardroom executives have cited customer acquisition as one of their top priorities to business success.
- Only 37% of loyalty card programs can be joined at the point of sale.
- Reward program members are 7x more likely to spread positive word-of-mouth marketing to family and friends about their experiences than the general population.
- In the United States, there are 6.2 active loyalty card memberships per household.
- Brand value expectations have risen by more than 20% in the last year.
- Only 22% of consumers who have a loyalty card will actually shop at a physical store location.
- In the United States, the brand with the highest rated customer loyalty: Costco.
Consumers are looking at price more than convenience for their products. It is a trend that has been slowly building over the last decade, but has risen to prominence since the Great Depression. Families are low on cash and nearly half of them are living paycheck to paycheck. This is why so many loyalty cards are owned by the average household. It’s seen as a free and effortless way to make their spending dollars stretch further. When properly managed, it is. That’s why it is seen as a win/win B2C marketing effort. When these cards aren’t properly managed, however, only the business wins. That’s why careful spending is always necessary in any loyalty program.