As “Data,” “CRM” and the “Customer Database” continue the march toward the center of the marketing organization in tens of thousands of businesses, not surprisingly another “classic” marketing concept is rather “new” again — customer loyalty.
Customer Loyalty: Where to Start
The right place to start in your consideration of customer loyalty and creating a loyalty program is simple, and yet relatively often, rather overlooked.
A simple question we ask when discussing the “loyalty” dimension of customer experiences and the customer data they produce goes something like this: What does success look like when you implement a customer loyalty program?
The answer to that varies — but the worst answer is “nothing.”
“Nothing” is never determining what the end in mind should be for your customer loyalty program in the first place. When organizations invest in defining the outcome they seek, they are roughly 20 percent of the way to success. As the axiom goes, “If you spend 90 percent of your time defining the problem, you’ll solve it in 10 percent of the time.”
What Can We Expect From Loyalty Initiatives?
So what should we expect from a customer loyalty program? Here’s a partial list we’ve heard from the brands where we’ve used customer data to inform and improve customer loyalty:
- You keep those customers longer
- You generate more social referrals
- Those customers buy more often (frequency)
- They are less sensitive to pricing and increases in particular
- The cost of customer acquisition can actually be lower
- Exchanges and returns decrease “naturally”
- You recognize profit growth
These are all very real outcomes you can expect from a high-quality customer loyalty program built around your unique customer and your business.
How Does Loyalty Really Work?
This is the best question to ask. Most organizations I’ve worked with on managing a customer base (customer database) to drive business performance begin with a gold, or black card, a name for an elite club or a space they will convert to lavish “loyal” customers with attention.