Employ loyalty program marketing to boost participation
August 06, 2013

The majority of consumers who enroll in loyalty and gift card programs do so to take advantage of promotional offerings and save money. Yet many smaller retailers forget to encourage customers to utilize their loyalty initiatives and branded gift cards. According to MarketingProfs, a marketing news and information provider, a recent survey found customers who frequently visit a retailer's store account for approximately 20 percent of the business's consumers and generate 80 percent of its total revenue. If each of those customers participate in the retailer's loyalty program, engagement and overall sales can increase significantly. However, if consumers are unaware of retailers' initiatives, smaller businesses in particular may see participation in their their loyalty program stagnate and sales drop. 

The link between advertising and loyalty
According to the infographic on MarketingProfs that compiled the survey results, a retailer's top 20 percent of consumers are responsible for 72 percent of visits to the business. Throughout a top customer's relationship with a retailer, he or she will spend 10 times more than the average consumer. Newer customers tend to monitor their spending and are more price-conscious than their more loyal counterparts. 

Loyalty programs are essential to driving sales, as less than 20 percent of daily deal purchases are returned. In fact, the infographic highlighted the fact that customers who are members of a business's loyalty programs spread positive buzz about the company 70 percent more than those who do not participate in the initiatives.

However, simply having a loyalty program is not enough for it to be successful in driving sales and consumer spending, according to ClickZ, a marketing news site. The site suggested smaller retailers forget a one-size-fits-all approach to boosting participation in the initiatives in favor of multichannel marketing methods, such as a combination of email campaigns and mobile-friendly advertising. While smaller retailers may not have a difficult time encouraging consumers to opt in to their loyalty programs, participation can decrease if companies forget the loyalty membership lifecycle.

ClickZ reported this lifecycle includes:

  1. Asking consumers to enroll
  2. Bringing new loyalty program participants on board
  3. Recognizing, rewarding and retaining customer members

Many smaller retailers focus more on the first two steps rather than the third and see engagement in the program decline as a result. Businesses that have invested in loyalty programs should consider increasing their use of marketing mediums to drive participation. When VIP consumers are unaware their favorite business offers a loyalty program, they may not feel encouraged to visit the retailer as often, causing a decline in sales. 

Nexus: G-WEBCD2