Why marketing should reward loyalty instead of acquisition

  • 18 Sep, 2013
  • Boris Bogaert
Share this article

Many brands already know it’s easier to maintain satisfied clients than acquiring new ones. Once a relationship is established, a brand should focus on keeping that relationship healthy.

But how do brands build that relationship with their clients?

In the past, loyalty programs were set up in a way that clients had to purchase at least a certain amount of the product, within a certain time frame. Brands did this to gain a greater part of consumer expenditures by evoking repeat purchases.

Purchases were not registered digitally, instead, clients had to keep track of a loyalty card. The goal of a loyalty program is to establish a higher level of customer retention by providing more satisfaction and value to customers.

With so many retailers and brands having these loyalty cards, the effect of them reduced lifetime duration.

So how can loyalty still be stimulated?

Brand in the pocket

Instead of rewarding consumers with a freebie or a goodie they’re not really waiting for, brands can now actually reward consumers giving back a part of the order value. Not a coupon, not cash, but with a branded prepaid credit card.

Research shows that customers’ value perception is absolutely necessary for developing brand loyalty. This means that the loyalty program should be perceived as valuable by customers.

In this case, the consumer actually receives money, so they know the cash value of the reward. This makes the value perception much easier and relevant for customers.

Another benefit for the brands giving out these cards is the positive feeling the consumer gets every time he or she uses this branded credit card. Customers are being reminded to the fact that they actually “received” money.

Imagine going to your local garage for a new set of tyres and you have the choice between brand X rewarding you with a free tyre when you buy 4. or choosing Bridgestone where they get a credit card with money they can spend on anything they want.

Chances for subscription based companies to build loyalty programs

For consumer brands it’s important to keep control of the retention rate. For brands that sell millions and millions of consumer goods year after year, a slight decrease means thousands of products less being sold.

For subscription based companies like telco’s, insurance companies, … this kind of loyalty program becomes very interesting. Many clients hate the fact that they don’t benefit any of the promotions they do in order to acquire new customers. They see commercials where new clients get a discount while the loyal ones think by themselves: “I’m a client for over 10… When do I get rewarded?”

With this in mind, subscription based companies can start rewarding clients from day one, and rewarding them even more for every year they stay with the company. That’s a real loyalty program, where consumers actually benefit the fact that they are loyal to the provider.


Foto credits by Mollie Johanson
Share this article