Your customers are also your greatest marketing weapon, so driving your referral business will give you a competitive edge and keep your customers positive about spending with you. Retaining customer loyalty is vital to the long-term success and profitability of your business.
Get with the program
Loyalty programs are systems that offer incentives, either tangible or intangible rewards, to consumers for specific repeated behaviour, usually repeat buys. There is an art in effective customer loyalty programs and to keeping customers, and it is a mix of well-tested strategies and new technology.
The real driving force behind a successful client relationship is the ability to improve the client’s business performance and give them a competitive edge. You need to understand their market challenges and determine how your customer loyalty program can improve their performance.
Know your customers
The first step to a customer loyalty program that works, is for business owners and managers to answer specific questions to identify what type of loyalty program is the right fit for their business, including:
- what is the buying cycle of your customers?
- what proportion of customers are repeat buyers?
- how much is a loyal customer worth to your business over time?
- how much time do you currently spend winning new customers compared with nurturing existing ones?
Pick the right approach
The second step is to identify what type of loyalty program fits your business. Some of the most common types are:
- appreciation loyalty: giving customers more of your company’s product/service
- rewards loyalty: giving customers rewards unrelated to a company’s product/service
- rebate loyalty: giving customers some money back when they buy more.
To be effective, the necessary characteristics a loyalty program must include are:
- accessibility: a solution should be affordable yet sophisticated and a competitive weapon – think about how you can do things differently from your competitors to stand out from the crowd
- consistency: ensure that you are delivering what you have said you will, communicate this every month at the very least
- desirability: if using a points-based rewards system, excite customers by offering aspirational and personal goods and services as rewards
- affordability: the loyalty program should be a low upfront investment; you should pay only for the points or rewards you award.
Adding value to your business
Loyal customers represent your business’s goodwill and they are intangible assets that add value to your balance sheet.
The impact of loyalty programs is long-lasting, especially if you get the methods right.
Loyalty programs should complement business goals and have a competitive advantage. With a points-based program you are able to tailor it to meet the demands and interests of your customers – leaving you one step ahead of you competitors. Every business manager should explore all possible methods to maximise and retain their customer base.
