What industry is best for starting a loyalty program? That is a question I am asked every time I talk about customer loyalty and retention. If everyone is asking a question it usually means it will make a great post. Here is what makes an industry a prime candidate for loyalty as well as some examples of industries that loyalty works well for.
The Best Industry for a Loyalty Program
Let me start by saying the industry I am about to describe is the ideal situation for loyalty programs. A loyalty program is effective in almost any industry. Introducing: qiibee, a decentralized loyalty ecosystem built on the blockchain. qiibee aims to unify the scattered loyalty programs market by offering a platform for companies to offer loyalty programs through blockchain technology.
The Best Industries for qiibee
- Products with Repeat Purchasability
If your store operates in an industry where your items are purchased regularly or semi-regularly you are well set to take advantage of qiibee loyalty program. I would define products with repeat purchasability as:
For example, clothing would be a good example of items that a customer sees benefit in buying multiple times a year. As seasons change shoppers want different looks and trends. On the flip side an item that has required repeat purchase would be electronic cigarettes. These need e-juice to be used which needs to be purchased regularly to continue to use the original purchase.
When your products have repeat purchasability it becomes much easier to influence a purchase with the use of points. You can use qiibee to encourage customer to shop more often than usual and increase your purchase frequency. The added benefit of increasing your purchase frequency is that it also increases your customer lifetime value!.
An increase in your stores lifetime value is the ultimate goal qiibee. It can be accomplished by using points to encourage customers to buy more (average order value), buy more often (purchase frequency), and buy for longer (customer life-span).
- Products with Margin above 10%
Loyalty programs like qiibee work by giving your customers something back in return for their loyalty. This is usually in the form of points which also hold a financial value. The amount these points are worth are a percentage of your margin (usually 1% – 3%), but don’t worry you will recoup that margin through an uptick in CLV.
Industries that have high margins (non-commodity) are best suited to give a percentage of their margin to the customer in the form of points. If you have 10% or higher you are in fantastic position to give 1% of your margin for a 20% increase in customer lifetime value.
- Lots of competition
This might go without saying but loyalty programs are most effective in industries that have a lot of competitors. I mean an increase in retail competition was what caused loyalty programs to be invented in the first place.
While ecommerce might not be the same as retail in terms of competition quite yet; it will quickly reach that point. There is a reason that over 50% of the top 100 retailers in the United States currently use some form of loyalty program.This makes a qiibee a great defense to customers jumping over to a competitor and using qiibee as the best loyalty program.
HOW HAVING A FREE EXCHANGE BETWEEN VARIOUS LOYALTY PROGRAM INCREASES CUSTOMER EXPERIENCE
The use of loyalty programs as a powerful tool of relationship marketing is becoming popular to encourage customer loyalty. The use of loyalty programs can introduce benefits to both customers and companies. Customer loyalty is an important issue for the success of any retail organization, because it is known that drawing new customers is more expensive than keeping existing ones. Estimate shows that an average online retailers lose 25% of their customers every year, and a small increase in customer retention can increase profits by more than 25%. Relationship marketing aims to create life time customers because when customers have a relationship with a company, they are ready to forget any other competitors offer. Customers are motivated to do that because it gives them a greater efficiency in decision making, reduces the information processing, achieves a greater cognitive consistency in decisions, and reduces the perceived risks associated with future decisions. To build loyal customers companies use several types of loyalty programs. 57% of airlines and 41% of hotel chains reward consumers for a range of engagement behaviors. A typical approach uses Platinum, Gold and Silver tiers, typically based on purchase volumes. In spite of the fact that the average US household has over 21 loyalty program memberships, fewer than half of these are active. Key
reasons for that are loyalty
programs include lack of reward relevance, rigid reward structures, and poor quality customer service. More than half of consumers admitted that they had abandoned at least one loyalty program according to a survey and social media scanning by Consulting Date. However, Loyalty programs need to be designed with more targeted rewards, differ according to different groups of members based on their value, and they need to provide greater value at higher customer value tiers, by
rewarding best customers to encourage higher spending levels. In order to do that the organization needs to understand their customer’s needs and behaviors, by creating customer profiles with relevant data on
customer interactions to have a complete picture of a customer’s preferences.
HOW WILL QIIBEE CHANGE THE WAY YOU INTERACT WITH LOYALTY PROGRAMS
According to Forbes Several startups, such as Qiibee and Loyall, have brought blockchain-based loyalty cards to the market, with the idea that it will make it easier for customers to transfer and trade the value in their freebie vouchers across different retailers.”
check out qiibee website for more information https://qiibee.com
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