Currently, various loyalty programs are being patronized. Not to mention, the consumer loyalty management market arises up its value at $1.93 billion in 2016. And with a radical perspective, it is expected that by 2023, the mentioned figure would reach nearly $6.95 billion. Plotting it on a good loan, it is an annual compounded growth rate amounting to 21%.
Of course, all the retailers want to have loyal customers that would actually lead new ones into stores. Research says that customers that are coming back spend 67% more than that of first-timers do. If you think it’s not yet enough, perhaps, it would be certain that even a small, yet considerable, drop with regards to loyalty has got the power to put a business down. The value of loyalty stays the same—and perhaps would stay the same until forever—and would basically encapsulate us in a box of inconvenient truth.
Loyalty is a Beautiful Lie
Loyalty programmes don’t usually create loyalty in the hearts of your customer. A benchmark study conducted by Edgell Knowledge Network in 2012 revealed that retailers’ that offer a loyalty programme doesn’t make more recognizable loyal customers compared to others. Digging deeper on it, in accordance to the same study, 81% of those customers that get membership in loyalty programmes don’t even know what is it for and the benefits it can give them.
Furthermore, the said study was backed-up by another study conducted by Accenture in 2017 which suggests that almost a quarter of customers have either a “negative or non-existent response” towards loyalty programs.
In addition to that, a 2015 study by Colloquy reveals that only 42% of loyalty programme members are actually active or engaged. It was supported by a further research showing that consumers are, in all probability, seeking out loyalty programmes with brands they already admire and enjoy.
Hence, retailers are somehow, somewhat putting their money in vain when they are investing in loyalty programme without the certainty that loyalty will creep in their way.
The Best Thing to Do? Make Brand Love Rather than Loyalty
Of course, before anything else, retailers must know the difference between brand loyalty and brand love.
Loyalty, in a simple perspective, means you have got the power to insert a card into your customers’ wallets or bags. Love, on the other side, means you’ve managed to have a security to have a place in the customer’s heart—that is through paid membership.
Well, membership, whether attained just by not-too-pricey amount, creates a sense of exclusivity and gives your members an exclusive experience that traditional loyalty programmes actually can’t give. Having a customer give out a penny from her pocket for a fee creates an entirely amazing and inevitable feeling of commitment. On the other side, since the customers paid a fee, the retailer thus is obliged to render valuable, improved, and a way better service or products due to customers heightened expectations. Nevertheless, membership fees are real and, are revenues a retailer should do keep.
Lastly, maybe, the most enthralling reason for retailers to consider membership over loyalty is that customers merely want it—want you. In fact, a research conducted by Loyalty One states that “sixty-two percent of consumer respondents said they would consider joining a fee-based rewards program if their favorite retailer offered one.” Also, among the Millennials, the digits are merely overwhelming that “75 percent of 18-24 year-olds and 77 percent of 25-34 year-olds saying they’d pay to belong.”
To wrap it all up, if you really want your customers to go back-and-forth your brand through various platforms at all cause, try to build brand love. Invest in where you know will create love for your brand—and paid membership a perfect scheme.