Customizing Connections Between Companies And Customers Company loyalty programs may have succeeded in maximizing sales revenues, but they have certainly failed in building true customer loyalty.

By Mohammed Nosseir

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Company loyalty programs may have succeeded in maximizing sales revenues, but they have certainly failed in building true customer loyalty. The overuse of incentive cards by many companies has devalued this marketing tool. However, capitalizing on loyalty programs in order to understand customers' purchasing behaviors and eventually address their needs, desires and willingness to spend will better help companies to increase their turnovers.

Due to the fact that they are used by most players across all industries, loyalty programs don't provide any value proposition nowadays. Overloaded with incentive programs, the majority of customers find it difficult to distinguish between the "good apples" and the less attractive ones. Being loyal to a single company isn't really a reflection of customers' happiness with its products or services; it's a matter of the customer being hooked to a given company as a result of accumulating incentives with it, combined with the risk that the customer will exit the relationship once all incentives have been redeemed.

Customizing the customer-company connection by establishing a two-way communication channel will lead to understanding customers' purchasing behaviors, and it will eventually help companies to address their customers sensibly. The "incentive card relationship" should be based primarily on enhancing companies' knowledge of the purchasing behaviors of their customer bases, while the accumulation of incentives should serve as the connecting tool that sustains the relationship between customer and company.

Companies need to consider shifting their marketing tactic from bombarding customers with mass promotional offers to working on engaging customers' minds constructively by presenting tailor-made marketing schemes. Companies may argue that tailoring relationships with hundreds of thousands of customers or, in a few cases, with millions of accounts, is a Mission: Impossible. This may be true if the companies were to address each connection separately, but devising an application designed to understand customers' purchasing behaviors is certain to help companies manage their interaction with customers effectively.

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Articulating a loyalty program that better reads, and reacts to, individual customer behavior based on the nature of products and services provided is the first step that companies should consider. To better read their customers' behaviors, companies should concentrate on addressing three dimensions: updating their personal profiles regularly, analyzing their purchase transactions, and prompting customers with tailored-made questions at any given connection point. Understanding customers' needs, desires and willingness to purchase will maximize companies' sales while also promoting positive company-customer relationships.

Customers are driven by diversified, implicit motivational factors that affect their willingness to pick up a product and disregard others. For instance, some customers tend to spend large amounts of money on purchasing essential products, but are reluctant to buy a luxury product that may cost a fraction of their total bill. Other customers will do all their shopping at the beginning of the month and hesitate to spend a penny later on, while certain customers who are willing to allocate most of their incomes to family members may be disinclined to buy anything for themselves. Companies need to decode these factors with a view to addressing them by implementing appropriate marketing schemes.

Today, most customers are aware that mass-market discounts are due to overstocking, and that substantial reductions in airline and hotel prices are a reflection of low season sales. Companies need to customize their promotional offers by thinking about how and when to approach their customers with special incentives. Collecting basic information in the course of the sales connection will eventually enable companies to help their customers spend their money wisely, encouraging them to use more products/services.

Focusing on quantifying the relationship with customers by constantly prompting them to calculate their eligible points and mileages will result in devaluing the reward schemes offered by companies, because customers will eventually perceive these rewards as being part of the "sales transaction". Whereas learning more about customers' purchasing behaviors and addressing their personal purchasing deficiencies will have a positive impact that will contribute to developing and maintaining a better relationship between the two parties.

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Mohammed Nosseir

Managing Director, Global Marketing Consultancy, Middle East Region

Mohammed Nosseir is the Managing Director of Global Marketing Consultancy, Middle East Region. He specializes in consulting to clients in the consumer goods and retail industries, primarily in the areas of growth and market entry strategies, target segmentation, value proposition and market potential assessment. He has worked and managed projects for leading international and regional companies in the Middle East and Europe. He has published several articles on marketing strategies and government reforms in a number of global and regional publications. Mohammed holds a BA from Ain Shams University in Cairo and is a Stanford (CDDRL) Fellow 2008, an Eisenhower Fellow 2009, and an Aspen Seminar Fellow 2011.

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