A recent Unity Marketing survey among C-suite and marketing executives, as well as entrepreneurs, identified finding new customers as their chief concern. But while attracting new customers may be top on marketers’ list for 2016, customer retention strategies are ultimately the most profitable and most effective ways to growth.
A new trend report from Unity Marketing, How to Create Brand Loyalty Programs to Attract Affluents: Designing Loyalty Programs for Luxury Brands, provides a research-based plan to build rewards programs aimed at the needs and desires of the world’s most profitable customers: American Affluents.
This research identifies a key opportunity: Build Connection with Young HENRYs
This new independent study reveals that affluents are highly engaged in brand loyalty and rewards programs, with more than 80% of the more than 1,300 affluents surveyed (avg. income $258.7k) active in one or more such programs, including pay-for-service programs like Amazon Prime or buyer clubs, like wine clubs. Such programs can be both a powerful tool to engage existing customers, and to attract new high-spending customers to a brand. This new trend report will show how.
- Developing the Potential of Existing Customers Is as Important, if not More So, to Businesses than Finding New Customers
Study after study has found that the cost of acquiring a new customer is many times more than keeping and developing an existing customers, with most studies finding customer acquisition costs 4 to 10 times more.
A Bain & Company study found a mere 5% increase in customer retention can increase a company’s profitability by 75%. Further, Bain research found that the average amount spent by a repeat customer was two-thirds more than a new customer.
And the Gartner Group reports that 65% of a company’s business comes from existing customers.
All this adds up to the critical importance of customer retention and development, not at the expense of new customer acquisition strategies, but as a part of a company’s overall marketing strategies.
- Brand Loyalty Programs Are a Key Strategy for Developing a Loyal, Engaged Customer Base
One of the chief tools in marketers’ arsenal for developing a loyal customer relationship is reward programs that deliver added value to repeat buyers. Brand loyalty programs keep customers from defecting because customers that have accumulated rewards feel connected to the brand because they have ‘skin in the game.’
Such programs encourage existing customers to continue to do business and not defect to a competitor. They entice customers to spend a bit more to achieve higher level rewards.
Rewards programs give businesses new insights into who their customers are, what they buy, how much they spend and how often they shop which helps businesses achieve greater focus and efficiency in new marketing efforts. And such programs can help attract new customers, since by offering added-value reward benefits through an existing reward program, brands can differentiate themselves and capture business that might go to competitor.
- Primary Reward Program Challenge: Delivering Real and Meaningful Value to Attract New Customers
While most companies with existing brand loyalty programs have a lot of data about their existing customers and what they want, they lack detail data about potential customers and what they can do to attract them to their individual programs. Unity Marketing’s new study looks across the range of affluents engaged with brand loyalty programs, including airline and hotel rewards, credit card and bank card rewards, retailer rewards and dining rewards, to identify what specifically they value most in such programs.
The results are revealing: Added customer service to members is something affluents want most, yet few programs actually deliver. 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.
- Key Opportunity: Build Connection with Young HENRYs on the Road to Affluence
In the research one customer segment pops as under-represented in traditional brand loyalty programs: Young HENRYs (high-earners-not-rich-yet).
These young HENRYs represent the best potential customers of the future, as most Ultra-affluents, the top 2-3% of U.S. customers and the traditional target for luxury brands, start on their road to affluence as HENRYs. While these customers due to lower levels of income would appear to be the most responsive to rewards programs that offer points to redeem for discounts, they are more likely to pay-to-belong and thus gain access to a wider range of more customized services and exclusive access.
The latest Unity Marketing research finds key differences between the reward programs that attract the more mature affluents from the young. Yet young affluents are the key to the future for brands seeking to develop a loyal, growing customer base not just for today but for tomorrow.
Subscribe to Unity Marketing’s Latest Brand Loyalty Trend Report
This new report, How to Create Brand Loyalty Programs to Attract Affluents, reveals the results of an in-depth survey among affluents who belong to one or more brand loyalty programs. It studies the role these loyalty programs play in the affluent consumers’ lifestyle and to what extent it drives brand loyalty to the programs in which they belong. This study looks across the various types of loyalty programs – Airlines, Hotel, Retailer, Credit Card, Paid Programs & Membership Clubs – to share best practices gathered from each and that might be adaptable for other types of programs.
The survey includes questions about the programs to which affluents belong and how active they are in using them to collect rewards, as well as redeem rewards; which programs within each classification (airline, hotel, credit card, retailer rewards, paid membership programs and buying clubs) are their favorite and why; and to what extent affluents are loyal to the brands which sponsor their favorite programs. It compares and contrasts the different programs within each classification finding how the most popular stack up against the competitive set across 7 key variables.
The trend report strives to make the key findings actionable with the final section of the report devoted to key takeaways that are illustrated by case studies of some of the best loyalty programs for affluents (e.g. American Express Platinum Rewards, Nordstrom Notes, Ritz-Carlton Rewards and Bare Escentuals Friends and Benefits). What affluents value in each type of program is studied, the findings of which help marketers focus their club offerings and marketing efforts to hit the hot buttons for the high-potential affluent customers.
This is an independent look at a broad cross section of affluent consumers with high incomes and spending power. The demographic analysis of each program reveals key customer segments that are more and less active in each program and calls out opportunities to tap the potential among underserved customer segments.
Subscribers will receive these deliverables:
- Executive summary report with detail analysis
- Detail survey crosstabs, with each survey question studied by key demographic segments (gender, age, income, wealth, ethnicity, and other factors)
- Loyalty brand programs studied include Southwest, Delta, American, United, Jet Blue, Star Alliance, Chase, American Express, Capital One, Citi, Bank Americard, Kohl’s, Macy’s, Starbucks, Target, Neiman Marcus In Circle, Aloft, Hilton, Marriott, Starwood, Hyatt, IHG, Wyndham, Amazon Prime, Costco, Barnes & Noble, DirectBuy, Club O, wine clubs.
- Plus, best practices in luxury brand loyalty programs are analyzed for American Express Platinum, Nordstrom Notes, Ritz-Carlton Rewards and Bare Escentuals Friends and Benefits.
This market research study is a powerful tool to identify the best potential customers to target with brand loyalty programs. By understanding the consumers’ needs better, businesses can beat the competition, make a connection and build a loyal customer base that will mean growth for the business. What’s more: focused, reliable and forward-looking market research will make marketing efforts more effective, thus reducing the cost of business. Effective market research enables businesses to pinpoint the messages and mediums to deliver those messages to yield the greatest return on the marketing investment. Order your copy today.