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Boosting profitability through building customer loyalty

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Dana Baki, marketing and community director at digital loyalty company, UrbanBuz, talks about the impact certain programmes can have on a business

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January 29, 2014 5:47 by



Although many large companies in the Middle East region have had loyalty programmes for years, the clear benefits and importance of customer loyalty to a business of any size is yet to be fully understood.

Studies reveal that retailers with loyalty programmes are 88 per cent more profitable, on average, than competitors without them. In fact, a five per cent increase in customer retention can lead to a 25 per cent to 100 per cent growth in profitability. How, you ask? Because it is five to ten times more expensive for a business to acquire a new customer than to successfully nurture a relationship with an existing one. It is, indeed, easier to increase the frequency of visits and transaction sizes with customers that have already shown interest in your offerings.

And, guess what? Customers want and expect loyalty programmes from the brands and businesses they love. According to the 2013 Marritz Loyalty Report, 80 per cent of customers believe loyalty programmes are worth participating in, and 57 per cent actively modify when and where they buy items to maximize the benefits they receive.

Setting up a loyalty programme on your own and doing it right may be a bit daunting, especially for a small business. Luckily, companies, such as UrbanBuz, are sprouting in the region to enable local businesses of all sizes to easily establish their own programmes. Before embarking on this journey, however, a company should keep a few industry and market trends in mind.

Outdated loyalty models

Traditionally, many businesses have set up paper punch cards offering deals, such as ‘buy nine cups of coffee and get the tenth free’. These solutions are, however, outdated and inconvenient for customers, and offer the business no data or tracking.

Interim solutions, such as scanable cards,have also emerged, but they have quickly become old fashioned and burdensome to customers, as they are disconnected from email and social media, which are key components of modern customer communication and engagement.

New methods

The modern solution is to go fully digital – in other words, going cardless and using modern technology, with full social media integration, to establish a loyalty programme.  This could take several forms, including a digital programmer or customer app.

This shift enables a business to benefit from data and insights intocustomers’ habits and spending patterns, thereby allowing more targeted communication. Furthermore, it enables a business to not only reward its customers for their purchases, but also for specific activities related to the brand, whether it be liking its Facebook page, referring a friend or sharing an offer through social media.

Simple, easy and accessible

Going digital is the first step to making it more attractive for today’s customers. It is, however, important to also make sure that the digital solution you choose does not alienate your customer base. Using only a mobile loyalty app, for example, risks excluding a large portion of your client base that does not own smartphones. Asking your customers to remember to scan a QR code could also be viewed as a burden or hassle.

A successful solution, created by UrbanBuz, which has proven to be simple, easy and accessible to all has been to link a business’ loyalty programme to its customers’ phone numbers, which are entered into the system by the staff before completing the transaction. The digital system takes care of the rest automatically.

Gamify to increase engagement

Although most have never heard of the term ‘gamification’, all of us, whether we realise it or not, have been sucked into a loyalty programme through game mechanics. It means creating addictive experiences that motivate customers to take specific actions and return more frequently.

Who hasn’t flown on a particular airline only to earn more frequent flyer miles and make it from silver to gold status? Indeed, successful loyalty programmes use game mechanics, such as leader boards, levels and competitions, to layer more compelling experiences that hook customers.

Building on simple features, such as status levels and competitions, can make a world of difference in customer engagement and, hence, on the impact to a business’ bottom line.

Although establishing a loyalty programme is the first step to building a sustainable relationship with customers, at the end of the day, it is the design, ease and engagingness of the programme that will dictate how much of an impact a business will see on its financial results.

Dana Baki is marketing and community director at UrbanBuz, a UAE-based digital loyalty company that enables businesses throughout the Middle East region to setup and manage their own digital loyalty programmes to attract and retain customers. UrbanBuz is the only company in the region to offer these solutions, which leverages mobile technology, social media and the latest consumer trends.

 



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