What is loyalty?

Loyalty is the strategy used to encourage customers to remain loyal to a company or brand. This may include special offers, rewards programs, personalized communication and effective customer service. Customer retention is very important since customers who are loyal to a business tend to spend more money and be more profitable in the long run.

Loyalty programs

Points programs

Customers earn points by purchasing products or using services, and can redeem them for rewards.

VIP Member Programs

Customers who have reached a certain level of spending or purchasing frequency are considered VIP members and benefit from exclusive privileges.

Cashback programs

Customers receive a percentage of their spending in cash or credit to use on their next purchases.

Sponsorship programs

Customers can refer friends and receive rewards when they make purchases.

Multi-brand loyalty programs

Customers can earn points or rewards by purchasing from different retail partners.

The importance of loyalty

Increase the sales

Loyal customers tend to purchase more more frequently than occasional customers.

Reduce acquisition costs

Generally, it is more expensive for a business to acquire new customers than to maintain existing customers.

Improve profitability

Loyal customers tend to be more profitable in the long run because they tend to spend more than infrequent customers.

Improve reputation

Satisfied and loyal customers are more likely to provide positive publicity for the company, particularly through word of mouth.

Make sales forecasting easier

Businesses can use some specific data on the purchases and behaviors of loyal customers to predict future sales and plan their production and inventory.

The loyalty rate

The retention rate measures the proportion of customers who continue to use a company’s products or services over a given period. The retention rate is obtained by dividing the number of loyal customers by the total number of customers and multiplying the result obtained by 100 to obtain a percentage. When the retention rate is high, it indicates that customers are satisfied with the company’s products or services and that they are less inclined to move to a competing company.

Types of loyalty

Loyalty through quality

Loyalty through quality consists of offering high-quality products or services in order to convince customers to return.

Loyalty through prices

Loyalty through pricing consists of offering special offers and/or considerable discounts to customers in order to retain them.

Loyalty through service

Loyalty through service consists of offering superior quality of service in order to encourage customers to repeat the experience within the same company.

Loyalty through personalisation

Loyalty through personalisation involves offering customers personalised services based on their personal preferences.

Loyalty through the community

Community loyalty consists of bringing together a community of customers loyal to the brand, in order to encourage other customers to join them through the group effect.