Loyalty. Why brands often miss this great opportunity for retention.

The concept of loyalty programs might strike you as a flash from the past, but could it actually be the future?

According to Profitwell, 80% of future profits comes from just 20% of existing customers. So how come these already existing customers are being left out of their rewards? Most companies offer several discounts or free shipping for your first order, but what happens after that first purchase? That is a great opportunity to reward the customer and gain their loyalty early on, but it is very often missed.

There are several flaws with loyalty programs currently. Some might think that getting free shipping or a bonus at the end of the year that you need to spend within a month is enough. That sometimes only leads to “forcing” your customer to buy things they don’t want nor need, completely opposite to loyalty. That concept is heavily outdated and based on different times. Consumers don’t interact with brands the same way anymore. Just like the way of communicating with each other has changed, communication with brands have changed. We interact with social media platforms, search engines, app stores, and marketplaces. Therefore we need something that is more interactive than getting an email with a discount code or even membership status points that expire if you don’t continue to consume.

When being in a loyalty program you are very limited with your points. You can only spend them with that specific brandand is most of the time time limited. Not all existing loyalty programs are bad but most of them are due for some improvement. Finding ways to get to know your customers and what other brands and products they enjoy will turn short-term rewards into long-term loyalty. It’s important to keep in mind that each individual has a multifaceted identity. They belong to myriad overlapping communities, social groups, tribes and subcultures. They have relationships with many brands at once. A cyclist can be a mother, a car-lover, a kombucha addict and a jazz aficionado.

So in conclusion, loyalty programs are possibly one of the best ways to market and gain retention from already existing customers. Creating a new way to interact with customers and not be stuck in the 90s can increase the value of your entire brand.