How does your business retain its customers? Nielsen research has shown that the quality of your product and level of customer service are crucial to long-term customer relationships. This means you have to dig deeper and provide sound, tangible reasons for customers to return through how your business operates.
It no longer suffices to throw coupons at customers and hope for the best. Tailoring customer loyalty programs to the exact needs and wants of your target is essential to build this connection with your customer base.
Why have a loyalty program?
It can cost seven times more to acquire new customers than to keep them.
Bain & Company found that acquiring new customers is seven times as expensive as simply retaining old ones. They also suggested that increasing customer retention by five per cent can raise profits by up to 95 per cent.
Despite this, many organisations still focus on acquisition over retention, neglecting the massive potential of implementing effective loyalty programs. The tangible benefits of such programs, result not only in increased sales and market share, but can positively impact reputation.
How to find the right fit
Knowing that loyalty programs are a smart move is one thing, getting them right is an entirely different story.
Be clear about what the end goal is for you. Do you want to attract new customers, increase wallet share or decrease churn? With a clear finish line in mind, it becomes easier to decide how you will get there with your program.
Get to know your customers before you decide on a loyalty program.
If the majority of your customer base is the Millennial generation, you will need to communicate differently than you would with Baby Boomers. Then, once you know who you are targeting, you can tailor the loyalty program to their needs and expectations – using mobile apps instead of physical newsletters for example.
It is one thing to reach out to your customers with an initial email. But, according to a report by the International Institute for Analytics, only 35 per cent of customers are truly engaged with their loyalty program, leaving large margins of growth untapped.