Customer loyalty can maximise revenue and reduce marketing costs

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Launching a customer loyalty scheme provides multiple benefits and can generate repeat business. Industry statistics prove that these schemes maximise revenue and reduce marketing costs quickly, plus boost customer value over a lifetime.

How loyalty schemes work

Customers are incentivised to repeat purchases to gain loyalty rewards. As a result, customer spending increases and their relationship with your businesses deepens with each visit.

You save money on marketing outreach by transforming customers into brand advocates. They’ll recommend your business on the strength of your loyalty scheme and the personal relationship that they now have with you.

Why launch a customer loyalty scheme?

There’s never been a better time to launch a customer loyalty scheme. Customers are increasingly brand loyal, and 25% report that they are more brand loyal than they were a year ago.*[i]

  • 80% of your future revenue will come from 20% of your current customers[ii]
  • The likelihood of selling to an existing customer is 60-70%, but only 5-20% for a new customer[iii]
  • 18% of customers say loyalty incentivises help them to choose one brand over another.[iv]

How loyalty increases revenue

Loyalty schemes reduce churn and increase average spend per customer. When customers regularly engage with loyalty programmes, revenue increases in the short- and long-term.

  • Reducing churn by 5% can increase profits by 25%[v]
  • Businesses with loyalty schemes grow revenues 2.5x faster than peers[vi]
  • Loyalty scheme customers spend 12-18% more a year on average[vii]
  • A 7% increase in customer loyalty can increase customer lifetime value by 85%.[viii]

How loyalty schemes support your marketing

Loyalty programmes provide your business with data about how your customers spend, where and at what time. You can then use that data to create targeted promotions to boost revenue during slow periods, cross- and up-sell products, and increase order size.

  • 70% of customers will recommend a brand based on its loyalty scheme perks[ix]
  • Customer acquisition marketing costs 6-7% more than customer retention marketing[x]
  • 71% of customers say loyalty programmes are a meaningful part of their brand relationships.[xi]

Brand development benefits of loyalty

Speciality coffee business WatchHouse wanted to provide value-for-money to its customers during the cost-of-living crisis. However, the team did not want the WatchHouse brand to become associated with discounting.

Providing a stamp card loyalty scheme gave WatchHouse customers a 14.5% discount over six drinks. Customers benefit from value add, while WatchHouse retain its brand integrity.

5Loyalty-supported loyalty schemes: the statistics

Those who have launched loyalty schemes with 5Loyalty praise its white-label application for being entirely customisable to brand aesthetics and easy for customers to use.

Businesses have also seen vast loyalty scheme uptake:

Sushi DogWatchHouse
30 sign-ups a day1800 registered members in first 4 monthsLoyalty redemption accounts for c.2% of all salesEstimated 20% of customers are stamp card loyalty users
121% average increase in loyalty customers month-by-month 13,500 customers using the app50% jump in app usage from January 2022

Businesses can choose whether to offer a stamp card loyalty scheme (with one stamp per purchase/product purchase) or a points-based loyalty scheme. How a business chooses to reward loyalty can be totally customised to fit its unique objectives. 

Subscription-based loyalty

Subscriptions are another tactic hospitality businesses can use in addition to existing loyalty programmes to capture revenue from customers.

Loyalty tiers – including a subscription tier – support you to identify and appeal to your most engaged customers, as well as provide those customers with a privileged consumer category to buy into.

92°: £23,000 in additional revenue each month

Speciality coffee business 92° launched their subscription loyalty service in January 2022, charging £25 a month for 5 hot drinks every day and 10% off each purchase made in-store. Since launch, their subscription service has provided astonishing revenue increases per month.

890 subscribers£23,000 in additional revenue each month60% renewal rate

Conclusion

Loyalty schemes transform customers into brand advocates. Not only does spend-per-visit increase, but they are also likely to spend more over a lifetime. Launching a customer loyalty scheme will support you to save on marketing costs as you better retain existing customers, who will engage in outreach on your behalf.


[i] *data gathered in 2019. https://www.prnewswire.com/news-releases/new-data-reveals-that-brand-loyalty-is-on-the-rise-among-consumers-300957799.html

[ii] https://www.forbes.com/sites/alexlawrence/2012/11/01/five-customer-retention-tips-for-entrepreneurs/

[iii] https://www.invespcro.com/blog/customer-acquisition-retention/

[iv] https://nmgprod.s3.amazonaws.com/media/files/97/e3/97e3466268a5f6a39748b0acf861188d/asset_file.pdf

[v] https://www.entrepreneur.com/growing-a-business/how-churn-destroys-businesses-and-how-to-stop-it-at-yours/329652

[vi] https://hbr.org/2020/01/are-you-undervaluing-your-customers

[vii] https://www.fundera.com/resources/brand-loyalty-statistics

[viii] https://www.talon.one/glossary/customer-lifetime-value

[ix] https://cdn2.hubspot.net/hubfs/352767/Loyalty%20Report%202018%20Files/Bond_TheLoyaltyReport%202018%20US_Exec%20Summary.pdf

[x] https://www.superoffice.com/blog/customer-retention-tips-with-crm-software/

[xi] https://www.forbes.com/sites/blakemorgan/2020/05/07/50-stats-that-show-the-importance-of-good-loyalty-programs-even-during-a-crisis/?sh=2d88f4322410

Latest insight

SushiDog Loyalty Scheme Case Study

SushiDog was founded in 2018 when its first store opened in Westfield Shopping Centre, London. Since then, SushiDog has gone from strength to strength and