Loyalty programs have become a staple in today’s hyper-competitive market. Generally operated by retailers & marketplaces, these programs offer a wide range of benefits for both businesses and customers, making them an essential tool for driving sales and building brand loyalty. But these programs generally focus on the retailer’s primary channel. On the other hand consumer brands need an omnichannel loyalty program to support their brand building efforts.
Why Omnichannel Loyalty Program?
Here we list the top 6 reasons for Consumer Brands to be initiating their own loyalty programs.
1. Increased Customer Retention
One of the primary reasons why loyalty programs are important for consumer brands is that they provide a way to increase customer retention. By offering rewards for repeat business, brands can encourage customers to pick the same brand again during next purchase. According to a Forrester research report cited in TheWiseMarketer, 52% respondents said that a chance to earn points influences them to ignore offers from competitor brands. This is crucial in today’s market, where it can be more expensive to acquire new customers than to retain existing ones.
2. Customers are Everywhere
Today’s customers are moving towards online marketplaces. In fact, a McKinsey report suggests that 50 to 60 percent of retail revenue growth over the next three years could be driven by marketplaces. The same customer who is buying at the neighborhood store may be looking for the next purchase from home over internet. No brand can afford to lose customer retention opportunity in any channel.
3. Customer Engagement
Loyalty programs can help to increase customer engagement and loyalty. Loyalty programs provide a platform for customers to securely share their personally identifiable information (PII) with their favourite brands. Using this valuable information, brands can build meaningful engagement, listen to the “Voice of Customer”, address any concerns and provide after sales support. By creating a program that rewards customers for their loyalty, brands create a sense of belonging and customers can feel a connection to the brand. This can lead to positive word-of-mouth recommendations and customer advocacy. Moreover, loyalty programs can also foster a sense of community among customers.
4. Reliable Customer Insights
According to a report by Forrester Research, the average market research budget for CPG companies in the US was around 1.5% of total revenue in 2020. Loyalty programs provide a more reliable way for consumer brands to gather valuable customer data and insights, as the research is not limited by the representative sample provided by the research partners. By tracking customer purchases and behaviour of a wider set of consumers, brands can gain a better understanding of their target market preferences & trends and use this information to improve their marketing and product offerings.
5. Effective Digital Marketing
Another benefit of loyalty programs is that they can be a powerful marketing tool. The digital marketing spend is increasing each year across industries. More CPG companies are shifting their marketing budget to digital platforms like social media, search engines, and e-commerce sites, to reach their target audience more effectively. However, with the third party cookies set to be blocked by 2023, marketers would need customer PII and consent for effective targeting. By sending targeted promotions and offers to loyal customers, brands can drive more sales and increase brand awareness. They can use customer data and analytics to personalize marketing efforts and offers to specific segments of customers.
6. Rationalize Advertising Expense
According to a report by Kantar, CPG companies in the US spent on average about 13% of their revenue on advertising in 2020. This expenditure had twin focus. Gaining new customers and retaining existing ones. Generally, the same message is not the most optimum for targeting both these groups of customers. By instituting a loyalty program, brands can repurpose the retention expenditure towards direct engagement. They can use the mass media budget exclusively for new customer acquisition, thereby enhancing efficiencies.
Overall, the goal of loyalty marketing solutions for CPG companies is to encourage repeat purchases, build brand loyalty, and increase customer retention. With the right program in place, consumer brands can gain a significant competitive advantage in today’s market. Some brands have started taking initial steps towards this direction by incorporating loyalty programs on their online stores. However, since currently the brand owned stores’ contribution to overall sales is in low single digits, they need a true omnichannel loyalty solution for consumer brands.
