Every business owner must understand that making their customers happy is one way to drive and guarantee sales. Marketing experts have constantly developed different strategies to lure and attract people to their brands through promos, advertising, and messaging.
While generating new sales leads is an excellent way of enhancing profitability, retaining old customers remains the best strategy to ensure the growth of your business.
Many businesses spend billions of dollars searching for new customers, neglecting the need to retain old ones. Customer retention plays a role in profitability and the growth and perception of your brand. Studies show that it is six times more expensive for businesses to acquire a new customer than to keep an existing one.
It takes a lot of time and actions to convince leads to convert into customers. On the other hand, it takes very little convincing to make existing customers become repeated ones. So the question is, how can you achieve customer retention and enhance your profitability? Today, more business owners and marketing heads rely on customer retention programs to convert existing customers into repeat buyers.
Statistics show that marketers’ use of customer loyalty programs would grow by 80% over the next two years. Likewise, 63% of top marketers are already using loyalty program platforms.
There are different types of customer loyalty programs. However, one very high-performing loyalty program that stands out is a customer loyalty program based on milestones. Tier-based loyalty programs help lure customers into changing their spending patterns by allowing them to become a part of a particular group that includes other customers.
Businesses can leverage milestones in customer retention programs to enhance customer loyalty and improve revenue drive. Research shows that 50% of customers would agree to increase their spending to attain a higher level in a customer loyalty program based on milestones.
What is a Customer Loyalty Program Based On Milestones (Tier-based)
A customer loyalty program based on milestones is a customer ranking-based loyalty program that allows customers to leverage the benefits of specific programs according to the group assigned. In this form of a loyalty program, the customers get categorized into different groups. Each one has a set of criteria for customers to meet to enjoy the benefits and rewards of that particular group.
It enables business owners to identify and reward their most valuable customers. In the long run, milestones in customer loyalty programs encourage your customers to become loyal to your brand.
Benefits of customer loyalty program based on milestone
Several benefits come with a tier-based loyalty program. They include the following:
- Helps to establish a sense of importance and deep loyalty: People love where they are valued and accorded recognition. Customers who get offered perks reserved for only a few would automatically develop a feeling of exclusivity and a sense of high perceived value. Customers who fall under this rank would be willing to spend more to maintain or improve their reputation. It is just human psychology.
- Create opportunities to connect with your customers: Customer loyalty programs based on milestones provide opportunities to connect with your customers. You can enhance the connection between your customers by providing them personalized and exclusive offers and bonuses. Similarly, you can choose to set up automated email campaigns to motivate your customers to move from one stage to another.
- Streamline Customer Segmentation: Every business owner should identify their most valuable customer and place them at the top tiers of the loyalty program. Such a robust strategy would help push your brand and encourage customer retention.
- Forster’s competitive attitude: Milestones in customer loyalty programs are capable of stimulating competitive aptitude in customers. In a bid to unlock the benefits associated with specific tiers, customers would get inclined to spend more on your products. As a result, you must assign higher value rewards and perks to levels to stimulate your customer’s interest and drive them to achieve specific milestones in your loyalty programs.
Strategies to formulate successful customer loyalty programs based on milestones
One way of ensuring successful customer loyalty programs based on milestones is how well you continually motivate your customers to climb up your loyalty program. So you should create a tiered loyalty program that engages your customers and delivers profitability for your business.
The following are some strategies you must consider to implement customer loyalty programs based on milestones successfully.
- Make it simple
Ensure you make the milestones in your customer loyalty programs easy to earn and redeem. It is equally important to make the climbing up process straightforward without any complications. If you do not want your customers to get drawn to your competitors’ enticing and simple milestones loyalty programs, then ensure you remove any trace of vagueness in your loyalty program.
- Offer Premium Value-based Rewards
Avoid offering a broad range of rewards to high-value customers. Assign premium and specific perks exclusive for high spending customers in your customer loyalty programs based on milestones.
- Integrate Gamification into your loyalty program
Incorporate gamification with your milestones in customer loyalty programs to earn more points and climb up your tiers program. Several organizations, including Starbucks, have used Gamification in their customer loyalty programs to allow their high valued customers to earn points.
- Adopt the use of experiential rewards
Research shows that 58% of consumers would switch half or more of their spending to a provider that excels at personalizing experiences without compromising trust. You can make use of experiential rewards such as celebrity meet and greet, inviting top-tier customers to exclusive company events. Customers are always willing to spend more once they are satisfied with their personal experience with your brand. Leverage on it, and enhance your revenue drive.
How To Determine Your Customers Tier-Eligibility
Tenure: You can use the duration in which a customer has remained loyal to your brand to determine their eligibility level in your customer loyalty program based on milestones.
Customer’s spending volume: Your customer’s spending volume and frequency over a specific period are vital to helping you determine their tier eligibility.
You can also base customer’s eligibility on the number of points collected over a particular period if your milestones loyalty programs get combined with a points reward system.
Non-transactional customer attitude: Aside from the business transactional attitude of your customers, you can determine their tier eligibility by looking at other aspects of the customer, such as referrals and social media activity.
Customer loyalty programs have changed the face of marketing in recent times, and customer loyalty programs based on milestones remain one of the high-performing loyalty programs for any business.
Combining both tangible and intangible benefits as part of your milestones in customer loyalty programs is undoubtedly a robust strategy in taking your business to the next level.