It is well known that there is a higher cost of bringing in new business compared to retaining existing customers so increasing your customer retention can significantly boost bottom-line profits. And yet many businesses are missing a trick when it comes to building customer loyalty.
Customer loyalty schemes can be an effective way to improve customer retention levels, but often consumers are left feeling largely unimpressed by their rewards.
The problem is that many businesses add customers' names to their lists, but then appear to forget them. There isn’t enough engagement, which leaves people with a loyalty scheme they don’t use.
The key to making it work is to ensure you’re correctly using the wealth of customer information collected and offering customers benefits based on what they like and where they are already buying into your loyalty scheme.
Customers like loyalty schemes because they feel they are getting rewarded for giving you their business. So your scheme needs to offer customers something they will appreciate. However, it should also be devised with profit in mind.
What you should think about when considering loyalty
- When operating a loyalty scheme, think about getting the basics right. Customers need to be very clear that the rewards need to be relevant to them and in a format they can access.
- You need to consider if you have a good understanding of what your most profitable or valuable customers are thinking.
- Build a database to help you identify key customer loyalty trends
Implementing a customer loyalty scheme
Whilst good overall service is the best way of generating customer loyalty, sometimes new relationships can be strengthened, or old ones refreshed, using customer loyalty schemes.
You can decide to offer rewards on the basis of:
- repeat custom
- cumulative spend
- orders for large quantities or with a high value
- prompt payment
- length of relationship
You can also provide key customers with loyalty cards that entitle them to a discount on all their purchases.
Employees who deal with customers' should be fully aware of current offers and keep customers informed. Sometimes brochures and other marketing materials are the best way of getting word out about a new customer incentive.
Don't forget though that your customers' view of the overall service you provide will influence their loyalty much more than short-term rewards will. They can also be used to persuade customers to give you another try if you feel you have successfully tackled past problems with your customer service.
There is specific legislation in place covering inducements for NHS services. For further details regarding loyalty schemes involving NHS services please contact our information department.