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Strategies for building a successful customer loyalty program
Roughly 80 percent of Americans participating in a loyalty program say their membership in the program impacts their purchasing decisions, according to a recent Maritz poll of consumers. Seventy-four percent of Americans say that without a loyalty program, they would buy less from any given company. Indeed, many savvy direct marketers realize the value of customer loyalty, and have been offering loyalty programs for years to drive repeat purchases and establish stronger customer relationships.
But, with the growing number of loyalty programs on the market, consumers have more choices than ever before. The competition is fierce, and a direct marketer’s gut reaction may be to offer deeper discounts.
Resist this temptation until you know who your best customers are and what motivates their “best” behavior. Attitudes towards your brand, as well as brand positioning, play a key role in influencing customer behavior and creating loyalty. To gain a comprehensive understanding of loyalty, companies must measure both attitudinal and behavioral loyalty and understand the relationship between the two. Intentions based on positive attitudes don’t always translate to behavior. And behavior, in the absence of a strong attitudinal foundation, is highly vulnerable to competitive threats.
To be effective, your loyalty program’s structure, reward offerings and communications must be specific to your target audience’s attitudes, behaviors and demographics. The financial impact of a program that fails to drive the desired behaviors from the right type of customers can be significant. A potentially greater risk is dramatically changing or ending a loyalty program with the participating member base. Once the program has been offered to your customers, it is difficult to end it if it isn’t meeting its objectives without a negative reaction.
With this in mind, it is crucial that loyalty initiatives impact customer behaviors, including incremental transactions, higher average ticket size, repeat visits and extension of the customer life cycle.
How do you identify your best customers and build a program that motivates the behavior you want from them?
To realize a good return on investment (ROI), follow this eight-step strategic process to build a customer loyalty program that is tailor-made to identify, retain and grow your best customer file.
1) Loyalty Situation Analysis
Before designing a loyalty program, you need to understand exactly what your current situation is and what your capabilities are for instituting and managing an effective program. Conduct a thorough examination of the present environment and include answers to the following questions:
Roughly 80 percent of Americans participating in a loyalty program say their membership in the program impacts their purchasing decisions, according to a recent Maritz poll of consumers. Seventy-four percent of Americans say that without a loyalty program, they would buy less from any given company. Indeed, many savvy direct marketers realize the value of customer loyalty, and have been offering loyalty programs for years to drive repeat purchases and establish stronger customer relationships.
But, with the growing number of loyalty programs on the market, consumers have more choices than ever before. The competition is fierce, and a direct marketer’s gut reaction may be to offer deeper discounts.
Resist this temptation until you know who your best customers are and what motivates their “best” behavior. Attitudes towards your brand, as well as brand positioning, play a key role in influencing customer behavior and creating loyalty. To gain a comprehensive understanding of loyalty, companies must measure both attitudinal and behavioral loyalty and understand the relationship between the two. Intentions based on positive attitudes don’t always translate to behavior. And behavior, in the absence of a strong attitudinal foundation, is highly vulnerable to competitive threats.
To be effective, your loyalty program’s structure, reward offerings and communications must be specific to your target audience’s attitudes, behaviors and demographics. The financial impact of a program that fails to drive the desired behaviors from the right type of customers can be significant. A potentially greater risk is dramatically changing or ending a loyalty program with the participating member base. Once the program has been offered to your customers, it is difficult to end it if it isn’t meeting its objectives without a negative reaction.
With this in mind, it is crucial that loyalty initiatives impact customer behaviors, including incremental transactions, higher average ticket size, repeat visits and extension of the customer life cycle.
How do you identify your best customers and build a program that motivates the behavior you want from them?
To realize a good return on investment (ROI), follow this eight-step strategic process to build a customer loyalty program that is tailor-made to identify, retain and grow your best customer file.
1) Loyalty Situation Analysis
Before designing a loyalty program, you need to understand exactly what your current situation is and what your capabilities are for instituting and managing an effective program. Conduct a thorough examination of the present environment and include answers to the following questions:
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