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Customer Loyalty Marketing: Strategies, Programs & Processes |
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Why Seek Customer
Loyalty?
Raising your percentage of loyal customers improves growth and market
share. Loyal customers buy your product over and over, while non-loyal
customer simply defect to your competitors. Defection lowers your market
share and loyalty raises your market share.
Customer loyalty takes into consideration customer satisfaction, brand
loyalty, customer relationship Management and among all these I believe
this is mostly related to the later. While this forms certainly a
significant part of CRM, it is still debatable whether this is an end
route of customer relationship management.
In any case let us first define what customer loyalty is. Of all the
definitions that could be a part of this write-up I would advocate for the
following :
Customer loyalty is a company's ability to retain satisfied
customers. Better and faster issue resolution ensure strong loyalty.
Information technology can help companies achieve customer loyalty by
providing tools for analyzing customer data to assist in informed decision
making, and managing customer relationships from the sales process through
to fulfillment and support.
A Company can achieve Customer Loyalty through giving valuable insights
on most or all of the following aspects :
1. Service Leadership But above all one should have a systematic strategic plan for improving
upon customer loyalty.
Though it takes a lot less money to increase your retention of current
customers than to find new ones-but normally companies don't give it as
much effort as It should because it does take a lot of energy and effort.
If you currently retain 70 percent of your customers and you start a
program to improve that to 80 percent, you'll add an additional 10 percent
to your growth rate.
Particularly because of the high cost of landing new customers versus
the high profitability of a loyal customer base, you might want to reflect
upon your current business strategy.
These four factors will greatly affect your ability to build a loyal
customer base:
1. Products that are highly differentiated from those of the
competition. How to market to your own customers :
Giving a lot of thought to a company's marketing programs aimed at
current customers is one aspect of building customer loyalty.
When you buy a new car, many dealers will within minutes try to sell
you an extended warranty, an alarm system, and maybe rustproofing or even
discount coupons on further purchases of spare parts. It's often a very
easy sale and costs the dealer almost nothing to make. Are there
additional products or services you can sell your customers?
Three years ago my house was painted, and it's now due for
another coat. Why hasn't the painter called or at least sent a card? It
would be a lot less expensive than getting new customers through his
newspaper ad, and since I was happy with his work I won't get four
competing bids this time : Keep all the information you can on your
customers and don't hesitate to ask for the next sale.
Use Complaints To Build Business!
When customers aren't happy with your business they
usually won't complain to you or the company - instead, they'll probably
complain to just about everyone else they know - and take their business
to your competition next time. That's why an increasing number of
corporates are making follow-up calls or mailing satisfaction
questionnaires after the sale is made. They find that if they promptly
follow up and resolve a customer's complaint, the customer might be even
more likely to do business than the average customer who didn't have a
complaint.
In many business situations, the customer will have many more
interactions after the sale with technical, service, or customer support
people than they did with the sales people. So if you are serious about
retaining customers or getting referrals, these interactions are the ones
that are really going to matter. They really should be handled with the
same attention and focus that sales calls get because in a way they are
sales calls for repeat business.
Reach Out To Your Customers :
Contact . . . contact . . . contact with current customers is a good
way to build their loyalty. The more the customer sees someone from the
company, the more likely you'll get the next order. Send greeting cards in
every meaningful occasions, see them at trade shows, stop by to make sure
everything is okay.
Send a simple newsletter to your customers-tell them about the great
things that are happening at your firm and include some useful information
for them. Send them copies of any media clippings about your firm. Invite
them to free seminars. The more they know about you, the more they see you
as someone out to help them, the more they know about your
accomplishments-the more loyal a customer they will be.
Loyal Customers and Loyal Workforces :
Building customer loyalty will be a lot easier if the
company has a loyal workforce-not at all a given these days. It is
especially important for you to retain those employees who interact with
customers such as sales people, technical support, and customer-service
people. Many companies give a lot of attention to retaining sales people
but little to support people. Only a handful have been fortunate to have
the same great people in customer service for years-and the compliments
from customers make it clear that they really appreciate specific people
in your service function.
The increasing trend today is to send customer-service and
technical-support calls into queue for the next available person. This
builds no personal loyalty and probably less loyalty for the firm. Before
you go this route, be sure this is what your customers prefer. Otherwise
my suggestion is to assign a specific support person to every significant
customer.
In this dynamic and extremely competitive business environment, it has
become imperative for organizations to become more customer oriented.
Loyalty marketing has become prevalent across verticals, as businesses are
realizing measurable gains from the strategic decision to become more
customer focused.
The present trend advocates a step forward towards loyalty marketing
from the current mantra of 'profitable relationships', which might imply
an unequal relationship. Today a win:win relationship proposition ensures
Profit for the Organization as well as enhanced Value for the Customer.
Relationship or loyalty marketing, in one form or another, is a
mandatory for any customer-focused strategy.
These relationship programs can be aimed at fulfilling a variety of
objectives including:
Acquisition : Targeting the right audience to increase the number of
customers.
Activation : Enticing dormant customers into making the first and
subsequent transactions.
Retention : Retaining valuable customers and deriving maximum value
over their life-cycles.
Enhancement : Increasing the depth and breath of products and services
purchased by customers.
Customer Loyalty Program
A Customer loyalty program is based on a simple premise ... as you
develop stronger relationships with your best customers, they stay with
you longer... and become more profitable.
From driving repeat purchases to getting customers to become ardent
brand promoters, a company can create a customer loyalty program that is
aligned with your objectives & capable of tackling the unique
challenges of your market.
Our focus & proficiency in the work we do is reflected in very
strong intellectual properties that are applied in most engagements that
we take on.
The following models describe in relating customer's needs with
customized solution by identifying customer profile, desired behavior and
the history of purchase behavior.
Given Below is a model of Customer relation ship programme of a private Airlines selling air tickets :
The key behind a successful customer loyalty program is knowing who (Profile of Customer) purchases what, where, when, how much (History of Transaction), and using this magical insight to drive (Desired Behavior).
360o Benefits It allows you to
link Customer Profile and [Transaction] History data in return for
benefits. A powerful customer loyalty program delivers desired results
when it uses a judicious mix of Economic, Ego & Emotional benefits.
The best way to achieve customer loyalty is by managing the customer
loyalty process. Measure customer loyalty and improve the factors that
customers will appreciate most. To accomplish this one needs to upgrade
traditional customer satisfaction surveys so that they measure customer
loyalty. Then this data must be made actionable by frequent and clear
reporting of customer driven priorities. Finally, teams must be drawn up
to make improvements in customer facing processes, which is very
important.
One may ask, "We already measure customer satisfaction, will that
data work for loyalty?" Not necessarily. Research says satisfied
customers are up to six times more likely to defect than very satisfied
customers. Customers defect for two types of reasons:
Problems : Something goes wrong and
it isn't fixed quickly or properly.
Apathy: The brand fails to provide a good reason for customers to
remain loyal, so many of them switch.
The satisfaction measurement program would need to capture information
that relates to these reasons for defection, as well as demographics that
describe loyal customers. |
