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We all have that one store we make sure to visit whenever we’re out shopping, don’t we? And we recommend that store to our contacts as well. This is how customer retention benefits the brands. They ensure that their customers keep coming back for more and turn into “brand advocates” by recommending them to people. But turning customers into advocates is not an easy feat.

In this globalising economy, companies are focusing on nurturing a good relationship with their customers, fundamentally. One very beneficial way to accomplish that is through the “loyalty programs”. These programs are very useful for the brands and the customers.

Loyalty programs have proven to be a very effective tool for setting up good relationships between businesses and customers who are enthusiastic about the brand and its products. The positive outcome of these relationships directly influences the profitability of the companies in the future.

Customers are always in the search for exclusive and fair deals from these loyalty programs to enhance their experience. The companies focus on building trust and engaging the customers through rewards. These programs incentivize its prevailing customers to encourage them to maintain a long-lasting relationship. Loyalty programs are a cost-efficient way to retain clientele in comparison to the whole process of attracting and converting customers.

A business’s performance and growth are determined by the enthusiasm and readiness of its customers to recommend the brand to others as compared to considering just the retention of its existing customers. Loyalty programs create devoted customers who tend to buy products with high margin profits. They also reduce the costs related to marketing campaigns as they are already aware of the existing and new products.

While it is true that the loyalty programs provide plenty of benefits to the businesses, there might be times when there’s a negative impact due to the rising expectations of the customers and thus, projecting a loss for the companies. If not planned carefully, the companies might be giving out more than what they are bringing in and still end up not satisfying their customers, therefore, suffering a loss and end up losing their clientele.

Other service attributes like quality, rewards, policies, personalization along loyalty programs do have a crucial impact on the overall value. Nevertheless, the relationships structured through loyalty programs have seen a positive result regarding satisfaction levels.

The programs help the customers to envision themselves as important members of a larger whole. This aids in escalating the closeness people possess over the brand. Loyalty programs provide you with a lot of data about the consumers’ behavioural patterns and engagement which is very useful for future marketing plans and development.

They also help the customers in choosing from a saturated market. Apart from retaining the best customers, the companies can gain back their lost customers through quality loyalty programs. Fair deals can give them a reason to come back.

Customer reviews (user-generated content) can help encourage new customers to purchase from the business. It also helps the companies revise and make changes accordingly thus upgrading their products. To sum it up ( from a customer’s perspective) – provide a convenient, relevant, and fairly compensating loyalty program and you’re golden.