The fundamental assumption in loyalty marketing is that keeping existing customers is considerably less expensive than acquiring new ones. The loyalty experts Reichheld and Sasser claimed that only a 5% improvement in customer retention can lead to an increase in profitability between 25% and 85%, depending upon industry sector. Therefore increased ‘customer loyalty’ has a direct and major relationship with increased profitability.
There are many elements determining the ‘loyalty’ of a customer to a product or service – product performance, customer service, complaint management, loyalty programmes etc..
But one of the simplest tools to improve customer loyalty is by continually enhancing the value of the product or service by providing 3rd party customer loyalty benefits which are relevant to the customer and provide ‘value’ on an ongoing and regular basis. These 3rd party customer loyalty benefits or ‘soft rewards’ can be strongly branded to the sponsor and thus transfers positive ‘values’ to the sponsor brand. By providing 3rd party customer loyalty benefits which can be utilised regularly between purchase occasions of the sponsor’s product or service, there is continuous relevance and brand reinforcement.
See Counterpoint’s BESTrewards Customer Loyalty Programme Benefits