Leveraging Customer Loyalty to Boost Holiday Season Margins

Reduce discounting, maximize use of loyalty promotions to boost holiday season profitability.

In a few short weeks, the holiday season will be upon us. Thanksgiving and Black Friday all the way to Christmas are some of the busiest shopping days. In November of 2019, each day of the month saw retail sales cross 1 billion dollars. On a few days it even crossed 2 billion dollars. To capture a large portion of the sales volume, retailers are tempted to offer discounts. But discounts comes at the cost of reduced revenues. Discounting does not guarantee customer loyalty either. Customers will often switch brands which offer the cheapest deal. In such a scenario a Loyalty Rewards Program is an ideal way to attract customers and retain their loyalty without losing margins. 

A loyalty rewards program offers points instead of cash discounts. A discount is applicable only on the current purchase. However, loyalty points work on two purchases: the current purchase where customers feel like they are getting something and a hook for the next purchase, where the customer gets a reward for the next purchase. 

Additionally, customers have the flexibility to use the loyalty points as they deem fit.  The rewards could be freebies like discount coupons, free shipping, free samples or even third-party gift cards. These rewards enhance the overall user experience which is more important than mere discounts. Such meaningful experiences can be extended through multiple touch points with the help of omni-channel loyalty programs. These experiences get customers hooked to a rewards program and create brand loyalty. 

Since customers can only redeem their points to get a reward on their next purchase, these loyalty points encourage the customers to make another purchase. This behavior increases repeat purchases without reducing the profit margins.

Loyalty programs generate a lot of customer data. Data science and machine learning algorithms can turn this raw data into significant insights. A business can learn a lot about the shopping habits of customers and segment them accordingly. Equipped with such information, structuring marketing campaigns for specific segments is straightforward. These targeted marketing campaigns ensure sharper promotions which help you stand out among your competitors. This significantly improves the efficiency of your marketing dollars.

The biggest revenue generating opportunity of the year for retailers is around the corner. It should be leveraged for highest profitability. Sales volume is booming year-on-year and yet the competition for customer attention is only getting fiercer. Introduce a loyalty program to stay a step ahead of the competition. This will allow you to reduce discounting without negatively affecting your sales volume. Your profit margins will automatically increase. Over time as more people stay loyal to your brand, these loyal customers become brand advocates and help attract new customers.