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Customer Loyalty Brings Long-Term Sales

The newest insights into loyalty programs reveal the best ways to engage customers.
March 12, 2010
URL: http://www.entrepreneur.com/article/205508

Great companies don't just win new customers, they bring them back for more. Right now, building relationships with current customers is of the utmost importance, since belt-tightening consumers choose to buy from businesses they know and trust.

What's a loyal customer worth to you in a year? How about two years, or five, or even longer? Loyalty marketing campaigns are the norm for businesses large and small nationwide. Nearly 80 percent of marketers are committed to maintaining or growing their loyalty programs as primary customer retention and relationship building tactics, according to a recent report from the Chief Marketing Officer Council. And loyalty program members constitute the best and most profitable customers.

Americans hold 1.8 million loyalty club memberships, and the report shows the average US household is enrolled in more than 14 loyalty and rewards programs. But while they may be enrolled in many programs, Americans are active in fewer than half of them. So to keep your customers coming back to you for additional purchases, it's vital to create a loyalty program they'll actively use and rely on long-term.

Follow these tips to build a successful program for your business:

  1. Don't Abandon Service for Savings Alone
    Discounts and savings are on the minds of most consumers, yet don't overlook other major customer-pleasing enhancements, such as quick or better service or improved customer handling. New research from Genesys and analysts at Datamonitor/Ovum shows nearly two-thirds of consumers have ended a relationship with a company due to customer service alone, and the majority of them take their business to a competitor. Your best customers want personalized service and support that's accessible instantly--often by phone. This is where your small business can excel over larger competitors whose customers may feel lost in a maze of automated self-service.
  2. Make Communication a Two-Way Street
    With the cost efficiency of e-mail, it's no wonder it's the workhorse for the vast majority of loyalty campaigns. Printed mailings and statements are also used by many marketers to remind customers of benefits and rewards. And corporate websites are becoming increasingly important components in loyalty campaigns. For many types of businesses, it's smart to build interactivity into your company's site with customer generated content, online customer service, or live chat with a representative. You can also create a site specifically to enhance customer relationships and build loyalty. Just look at the way Starbucks has created a relationship-building environment at MyStarbucksIdea.com, with a reported 180,000 registered users who have played an instrumental role in helping revitalize the company.
  3. Avoid Loyalty Turnoffs
    Too much spam and junk e-mail top the list of what consumers don't like about loyalty and rewards program membership. While most member communication is monthly according to the CMO Council report, 20 percent of loyalty marketers interact with members on a daily, weekly or biweekly basis. How often do you communicate with your best customers? Daily or even weekly e-mails may be too frequent for many members, particularly if the offers or other communications are perceived as not relevant to their business or personal needs. Other turnoffs include programs that have too many conditions and restrictions, and rewards that lack real value.
  4. Personalize Contact with Individual Customers
    What customers really want are more discounts and savings based on relevant offers or individualized deals, and rewards that are easy to redeem from companies with which they have positive relationships. They want you to learn their buying preferences and offer rewards they truly value. As you expand your customer loyalty program, focus on deeper engagement with customers and personalized contact to build repeat sales. If you and your best customers value the relationship, you'll both be rewarded.