Direct Marketing, Mail Order, and E-commerce News from the National Mail Order Association
What IS a Loyalty program? (Part 1 of 4)
And ... how can you make it work for you?
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
There are 5 keys to creating a successful loyalty program:
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:
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:
This article is part one of four in a series.
About Ray Jutkins, October 3rd, 1936 — January 6th, 2005. Ray was one of the NMOA’s most generous contributors. Over the years Ray supplied the NMOA with hundreds of tips and articles for members. This is just one of many. Ray worked with B-2-B and Consumer clients throughout the world ... including USA, Canada, Mexico, Asia, the South Pacific, Europe, the Middle-East, Central & South America, Africa. Keep an eye out for more of Ray’s marketing tips and how-to articles in the pages of Direct Marketing Digest and the article archive on the NMOA website.
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