From Transactional to Loyalty: The Imperative Shift for Brands


Oct 25, 2023 • 6 min read

Transactional to Loyalty

In his keynote speech at the Game Changers Loyalty Summit 2023, retail and consumer strategist Yongky Susilo emphasized a critical point. He highlighted that in the face of the new customer boom, brands need to make a fundamental shift from a transactional approach to a loyalty-centric one.

In today's dynamic business environment, the focus has shifted from one-time transactions to building lasting customer relationships. This shift is no longer optional; it's an absolute necessity for brands seeking long-term success and sustainability.

Why Brands Need to Shift from Transactions to Loyalty

1. The power of repeat business

A transactional approach typically revolves around one-time sales. While these single transactions are essential, they don't capitalize on the potential for repeat business.

Customer loyalty, on the other hand, encourages repeat purchases and long-term commitment. A loyal customer is not just a one-time buyer, but a consistent source of revenue.

2. Customer Lifetime Value

Loyalty-focused brands understand the concept of customer lifetime value (CLV). This metric goes beyond the immediate transaction value to consider the potential value a customer brings over the course of their relationship with a brand.

A loyal customer who keeps coming back is significantly more valuable over time than a one-time buyer.

3. Reduce acquisition costs

Acquiring new customers can be expensive, often requiring significant marketing and advertising expenditures. Loyal customers, on the other hand, require less investment to retain.

They are already familiar with your brand, and the cost of retaining them is usually less than acquiring new customers.

4. Positive word-of-mouth and advocacy

Loyal customers not only stay with your brand, they become its ambassadors.

They are more likely to recommend your products or services to their friends and family. Word-of-mouth recommendations from satisfied customers carry immense credibility and can drive new business.

5. Resilience in competitive markets

Loyalty acts as a shield in competitive markets. When you have a base of loyal customers, your brand is more resilient to market fluctuations and the entry of new competitors.

Your customers are less likely to switch to a competitor offering a lower price because they value the relationship they've built with your brand.

6. Adapting to changing consumer behavior

The way consumers engage with brands is changing rapidly. With the advent of e-commerce, social media and online reviews, consumers are more informed and vocal about their preferences.

Brands must adapt to this changing landscape by providing personalized experiences and building trust, and that's exactly what loyalty initiatives facilitate.

7. Build trust and emotional connection

Loyal customers trust your brand. They believe in the quality of your products or services and have had positive experiences.

This trust is invaluable. In addition, loyalty initiatives allow brands to build emotional connections with customers, making the brand a part of their lives.

The Role of Loyalty Programs

B2B Loyalty Programs are Driving Growth

Loyalty programs are an important tool in the transition from transaction to loyalty. These programs offer rewards and incentives to customers who consistently engage with the brand. Customers are not just buying a product; they are investing in a relationship.

A well-designed loyalty program keeps customers engaged, excited, and coming back for more. These programs can offer discounts, exclusive access, early product releases, or a points-based system where customers can unlock special rewards.

By offering rewards, discounts, and exclusive benefits, brands not only encourage repeat business, but also deepen the emotional connection with the customer.

Challenges of the Transition to Loyalty

While the shift from transactional to loyalty-based business models is compelling, it comes with challenges. Brands must invest in understanding their customers, building the infrastructure to support loyalty initiatives, and continuously engaging customers to keep them loyal.

In other words, brands must invest in customer data management, marketing automation, and customized customer experiences.

In addition, not all customers are created equal when it comes to loyalty. Some may need more attention and incentives to stay loyal, while others may only need minimal encouragement. Brands need to develop strategies to cultivate loyalty across different customer segments.

Wrap up!

In a world where choice is abundant and consumer empowerment is at its peak, the transition from transactional to loyalty-focused relationships is a strategic imperative. Brands that invest in building long-term relationships with their customers are better positioned to thrive in the dynamic business landscape.

From repeat business and increased customer lifetime value to advocacy and resilience, the benefits of loyalty are numerous. So for brands looking to secure their future, it's time to make the shift from transactional to loyal.

Are you ready to create your own loyalty program or revamp your existing program? Tada is your dedicated partner on this journey. Our innovative loyalty solutions can be customized to fit your unique needs. Don't wait, request a demo today.

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Content marketing specialist