A database
marketing program is the most effective way to build loyalty, increase customer
frequency, improve customer retention ... and boost sales!
It gives you a large
competitive advantage. And it offers your customers a strong reason to choose
you over another.
A loyalty program is
an expression of your companies culture. Of being close to your customer
in a personal and caring way. It brings the hospitality of your business
into the customers home or office. Offering a loyalty program tells your
customers or membership they are special ... and that you care.
The best loyalty programs
strive to obtain a greater "Share of Customer". By providing a
unique incentive you "hook" them so they visit your place -- they
buy from you -- more often. They choose to visit your store, to use your
products and services, instead of your competitors.
A loyalty program allows
you to create a relationship with your customers. By creating an interactive
environment. It is not an event. It is a process for changing customer behavoir.
Changing it so they buy your products / use your services. And, they do
it more often.
"Best customers"
are easily identified with these programs. They can be given special attention
... and they should receive special attention!
Your best customers
yield a higher unit volume ... the 80/20 rule goes into action, where 80%
of your business comes from 20% of your clients. Your best pay the bills!
Members of loyalty clubs
value their membership. They believe in the host company, their products,
their services ... and the people who serve them. They feel a special sense
of "belonging" to something. Communication to these "best"
are read, saved, acted upon.
Getting new business, keeping what you have, and building your base
The
cost of acquiring new customers is expensive. Usually much higher than getting
more new business from existing customers.
Why? Because existing
customers require less attention -- They already know you. They use your
products. They know your people. They understand your services.
And because of this
understanding, they are likely to return to you again and again. And to
buy from you over and over. With less incentive and motivation than it takes
to get new customers. It costs less to take care of what you already have
than to find new markets.
For these reasons loyalty
programs work!
There is a difference
between loyalty and frequency. Let's define them according to Webster:
Loyalty: 1. faithful
to one's country, friends, ideals and more. 2. showing such faithfulness.
Frequency: 1.
frequent occurrences. 2. the number of times an event recurs in a given
period.
Let's keep it simple.
Loyalty is being faithful. Frequency is how often you use a product or service.
The
two do overlap. They overlap because frequency of use of a specific brand
increases when there is a high degree of loyalty. When there is a benefit
for frequent use of a product or service, such as the airline, hotel and
rent-a-car bonus programs, loyalty builds.
There are 5 keys to
creating a successful loyalty program:
- Integrate the program into your existing marketing plan. And further
... into your company culture. Personalized relationships with customers
is not a here today gone tomorrow concept. The idea must become a part
of you -- you the organization, your products and services ... and most
importantly, your people.
- Use the knowledge you collect about your customers to learn from them
what they really want from you. Talk to them. And then listen! They will
tell you how to gain a greater share of their business.
- Target specific and appropriate messages to the right customers. Not
all your customers are created equal ... some are worth more than others.
Some need more attention than others. This includes making the right offer
to the right customers -- and at the right time.
- Set realistic achievement goals. Know you can expect some bumps in
the road. Your expectations should be as high as you would like to make
them ... as long as you provide the resources of people, money and time
to make it all happen.
- Plan from the beginning to measure all the results. All. Not just some.
And not just every so often.
Why is this important?
Because, as you develop and grow your program you need to know what is happening.
You will make changes. That is part of any business ... frequency/loyalty/retention
programs are no different. Measure everything from day one so you make the
right changes at the right time for your marketplace.
The overall success
of a loyalty program is dependent on several things:
- commitment of the organization sponsoring the program,
- the design and execution of its components,
- your program must be simple to operate by your marketing and operations
staff,
- it must be easy for your members/customers to understand how they benefit,
and
- it must offer rewards that will motivate increased response and build
retention.
Yes, these are "basic"
things. Yet, it is amazing how many organizations do not think through this
list as they embark on a customer relationship marketing program.
The primary objectives
of any loyalty marketing program are these:
- to create measurable increases in sales AND profits! (Profit is NOT
a four-letter word ... everyone is suppose to make one.)
- to increase frequency of visits or use by your members/customers.
- to improve customer retention -- to discourage defection to the competition
-- by offering an incentive for loyalty. In addition, many companies use
loyalty programs for at least two more reasons:
- to decrease reliance on mass marketing media tools, by doing these
things:
- targeting specific offers or messages based on real, live useage history,
and
- use the acquired database knowledge to target prime prospects. In these
two instances, the database is being used to both keep what you have ...
and to look for new.
- using the knowledge in the database for other purposes ... such as
new office or store site selection ... media selection, to decide if print
/ broadcast / direct / other media is the best way to reach the audience,
and ... surveys of customers and prospects, to determine the best way to
present your product and provide your service.
Evaluating the results
begins with first establishing measurable objectives. Specific numbers
to aim for. And then measuring response to your offers. To your promotions.
These promotions include
the mailing of a special "Club" membership/customer identification
card. Possibly a birthday and/or anniversary card. On a regular basis a
frequency club statement -- and other promotions that keep your customers
happy and up to date.
This plan -- this strategy
-- works much like compound interest. The results increase with each contact.
And so does your success!
Ray Jutkins
International Professional Speaker
Marketing Consultant
Well known for his ...
"Spend a Day with Ray" seminars
Telephone: +1+928+785-9400
Facsimile: +1+810+815-2520
E-Mail: Ray@RayJutkins.com
Website: http://rayjutkins.com
Snail-Mail:
ROCKINGHAM*JUTKINS*marketing
Rockingham Ranch
Roll, Arizona 85347-7066 U.S.A.
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