Sylwia Madej

Loyalty programs and their impact on repeat-purchase loyalty patterns

A store must constantly get to know its customers, know their current needs, concerns, opinions.

A store must constantly get to know its customers, know their current needs, concerns, opinions. Know what their path looks like until the moment of purchase, but also long afterwards. Loyalty program participants are becoming more active in the programs.

Currently, more than 40% of them are very active, which means that they are up-to-date in terms of their status in the program, always trying to take advantage of available discounts/rewards. Today’s customer is no longer satisfied with what loyalty programs offered a few years ago. Companies need to update their ideas according to the latest trends and needs of their customers. Maslow’s pyramid of needs illustrates human needs according to the priority of their satisfaction. The need for belonging is placed exactly in the middle, as the third need. It expresses people’s instinctive desire to create and maintain interpersonal relationships. Loyalty program organizers should also recognize this need and incorporate it into the design of the campaign. Customer becomes more than the person who bought. They can return again and again and encourage others to do the same. Effective selling is about making customers stay with a brand for longer. Yes, a one-time purchase is important to a company, but the key is to keep the sale going.

Business growth would not be possible without gaining the interest of new customers. However, building a long-term relationship is one of the priorities in the marketing strategy of many companies – both stationary and those operating exclusively on the e-commerce market. There is no doubt that the message reaching new customers should be different than the one addressed to regular ones. They have different needs and requirements. While some need to be convinced of the brand, others already have a positive shopping experience to draw on. As a result, getting a returning customer to buy requires a little less effort.

There’s no denying that stores that apply a loyalty program can count on making purchases at a higher rate than they would without collecting points.

What increases conversion in stores that have prepared discounts?

Establishing a threshold from which points are calculated e.g. if a customer receives 1 point for spending 10 PLN, there is a good chance that after completing a basket of 165 PLN they will be willing to buy some more goods. An attractive rewards card makes customers not look for products in store after store and buy where the conditions suit their needs. Discounts attract and tie the customer to one shopper, which gives us a great chance for repeat business. Discounts provide an incentive to engage with the store. Customer reviews are an incentive for more people to buy, and social media discussion is free marketing for the store. After all, consumers trust other shoppers far more than they do when a store communicates the same information.

Loyalty pyramid

In the loyalty pyramid, the lowest level is represented by brand switchers and price sensitive. At the second level of loyalty are habitual buyers, i.e. those who are satisfied with their consumption and are reluctant to change brands. However, these are consumers who are vulnerable to competitors, especially when they offer visible benefits. In saturated markets, it is this group of purchasers that is the target of competitive struggle, because after a possible change there is a high probability that they will buy the new brand for a longer period of time, which will translate into profits for the company. To retain habitual buyers, it is necessary to point out the features that distinguish the brand from the competition. The third level of loyalty is those who are satisfied and aware of the costs they would have to incur to find a new supplier. This segment of buyers is most important for periodic purchase (elective) goods because of the importance of the product to the buyer and the significant price. The fourth, even higher, level of loyalty is represented by people who like the brand and are therefore emotionally attached to it. Their choice is dictated by positive associations with the brand, experiences of use or perceptions of high quality. The highest, fifth level of loyalty is characterized by buyers who are committed to the brand and are thus the most valuable segment for the company. These are consumers who strongly identify with the values represented by the brand and are proud to own and consume it. The importance of this segment for the company results not only from the level of purchases made, but also from the influence that staunch supporters may have on other market participants. They are eager to provide consumer recommendations. People in this group are additionally insensitive to competitors’ actions, because they believe that a particular brand best meets their needs.

Four types of loyalty

There are four types of loyalty: true loyalty, implicit loyalty, false loyalty, and no loyalty. True loyalty is the most desirable from the point of view of the company’s interests. The buyer buys the company’s products frequently, in large quantities, and has a very positive opinion of the company. Disguised loyalty is when the customer has a positive opinion of the company, but for various reasons rarely uses its offerings. False loyalty is characterized by buyers who purchase the company’s products in large quantities but do not have a good opinion of the manufacturer. The buyer does not feel obliged to buy again, it all depends on the surrounding circumstances. Loyalty is when the customer does not have a good reputation with the company and rarely buys its products, mainly on the basis of the price conditions offered.