While acquiring new customers should be a strong priority for every business, it should come as no surprise that customer retention is often the key to growth and profitability. A new report from Unity Marketing goes a step further, offering best practices for designing loyalty programs to engage and retain the most profitable marketing sector: American Affluents.
The report, titled, “How to Create Brand Loyalty Programs to Attract Affluents: Designing Loyalty Programs for Luxury Brands,” uses data gathered from 1,300 affluents who are members of one or more loyalty programs. Loyalty programs can serve as an incredibly effective method of customer retention, and engaging high-value consumers creates a significant impact on profitability.
According to the report, just a 5% increase in customer retention can result in a 75% increase, a correlation that is impossible to ignore when designing a loyalty program. Additionally, repeat customers spend roughly 66% more than first-time customers.
When thinking of loyalty program rewards, what comes to mind are tangible gifts such as clothes, gift cards, and new gadgets. The report, however, offers a revealing take about what loyalty program members might actually be looking for in added value.
According to surveyed affluents, expanded customer service is a loyalty program benefit that is in high demand, yet rarely offered.
“With existing programs’ focus on points, they miss a benefit that can greatly improve true brand loyalty from existing customers and differentiate one brand from all the rest to attract new members − giving members added-value services and experiences,” said Pam Danziger, President of Unity Marketing.
The study looks not only at current affluent consumers, but future ones as well. The report found that HENRYs (high earners, not rich yet) represent a key demographic to keep in mind when looking at potential future high-value loyalty members. HENRYs, according to the study, respond exceedingly well to pay-to-belong programs, as well as exclusive access obtained through membership.
“All ultra-affluents typically move through the HENRY income level, so connections made with young HENRYs on their way up can yield huge returns for brands, luxury brands especially, once they reach the top tier of income and affluence.” Danziger told Loyalty360.
“The latest Unity Marketing research finds key differences between the reward programs that attract the more mature affluents from the young,” added Danziger. “Yet young HENRY affluents are the key to the future for brands seeking to develop a loyal, growing customer base not just for today, but for tomorrow.”