Establishing an Effective Customer Loyalty ProgramBanker Resource
February 6, 2013 — 1,265 views
A customer loyalty program can have contrasting effects based on how it is implemented. If used in the right manner, a customer loyalty program can work wonders in retaining your target market. However, poor utilization of strategies has the potential to lead to a waste of resources and valuable time, along with loss in revenue.
Developing an effective loyalty program for your customers can aid in achieving further success for your organization. Following are a few tips to establish such a program.
Know Your Target Market
Before entering into a business venture of any kind, it is important to possess a fair understanding of your target market, its likes, and preferences. The same applies to crafting a solid loyalty program. Conduct a market study to understand what attracts your customers, especially the loyal ones. Expert strategic consultants believe that the top ten per cent of your consumer base spends about 5-6 times the money spent by the other ninety per cent. Since this is the case, it makes sense to maintain and preserve the loyalty of the ten percent to ensure that they continue to engage in business with your company in the future. Thus, rewarding your loyal customers and offering them things they like must be atop your considerations while formulating a customer loyalty program.
Know Your Competitors
A customer loyalty program may be a necessity if your business is located in a crowded area with significantly low differentiation, specifically if your competitors already have them in place. It is important to know your competitors well so that you can learn about what they are offering and improvise on it when creating your loyalty program. Rewards that are part of industry standards must not be avoided or ignored at any cost as this can have an adverse effect on your business. For instance, if the ‘frequent flyer program’ was abandoned by an airline company, customers would not want to use its services.
In addition to industry-standard rewards, add special offers and bonuses that will make your company appear more profitable for customers in comparison with your competitors. Incurring initial losses is a part of business growth, so invest in a customer loyalty program as it has the potential to pay off huge dividends in the long run.
Don’t Limit Your Programs to Discounts
An effective customer loyalty program is not just about offering discounts to your customers, it is more about incentivizing them to come back for more. Customer loyalty can be attained in the long run if your business remains exclusive and provides rewards and perks instead of mere discounts. Loyal members must be given first preference when it comes to promoting special offers. They must be informed about any events or discounts in advance and must be rewarded with gift vouchers or redeemable vouchers so as to keep them coming back for more.
An effective customer loyalty program can turn a small-sized business into a global powerhouse. Make sure you focus on every little detail before planning out your customer loyalty programs.