Do Companies’ Loyalty Programs Pay Off? BPO Outsourcing Can Provide the Answer

Loyalty programs are nothing new – in fact, 60% of all companies engage their customers with some form of loyalty program. Whether in the leisure and hospitality market or other consumer businesses like retail, grocery, restaurants, gyms, spas, drugstores and more, customers can develop a strong psychological attachment to brands whose loyalty programs they subscribe to – and if designed properly, they will significantly increase spending and retention rates. But that’s only if they work. One report indicated that the average consumer belongs to more than 14 loyalty brands (frequently competitors), which suggests that these programs don’t always create loyal customers.

So what’s involved in determining the success of a loyalty program, and whether there is compelling ROI? When it comes to in-person shopping, there are two customer segments that seem to be significantly impacted by a loyalty program: consolidators (customers who literally begin buying more products – likely the same products previously purchased from competitors); and upgraders (customers who begin buying more expensive, premium versions of the same products they were previously purchasing). For these types of customers, the loyalty program can be highly profitable.

Which leads to the next question: how can retailers identify these segments and proactively target them with loyalty program marketing? Some of the useful metrics might be customer location – for example, their location relative to both the retailer and the retailer’s key competitors. Proximity to the retailer would marginally increase the impact of a loyalty program, while proximity to competitors would significantly increase its impact. Think about it this way: customers will be more likely to visit a store that’s close to them. If, however, the path that the customer takes to the store includes competitors, they are much more likely to be more vulnerable and would be a much higher-value candidate for a loyalty program. There’s your ROI – and its identification is closely tied to the strategic analysis of your customer. In other words, instead of focusing on converting the highest-spending customers, marketers need to identify and target the customers who are most vulnerable to competition. Targeting them with loyalty program promotions will ultimately yield the highest ROI.

As a business owner, how can you be confident in your loyalty program and trust in its impact on your bottom line? Established companies that offer BPO outsourcing services can be an extremely valuable resource – particularly one like Anexa, which specializes in sales and marketing. Our customized solutions and multi-channel marketing strategies support your goal of reaching the right person at the right time. Our highly trained marketing specialists understand the importance of creating value for your brand and focus on developing long-term relationships between your company and your customers. Our processes integrate technology and human talent, creating personalized interactions that are framed by the customer, the product or service, and your business objectives.

Reach out today and see for yourself – Anexa.