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How can direct marketers use information housed in their customer databases to promote loyalty?
Customer loyalty can be promoted by personalized communications. Here is a message we received: "Last year, Mrs. Hughes, you ordered Honey Baked Ham for [insert name here.] Since Christmas is coming up soon, we thought we would remind you that it is not too late to order a Honey Baked Ham for delivery this Christmas. To see the orders you placed last year, just click here."
Instead of using its database as a mailing list (blasting mass messages to the masses), Honey Baked Ham is using its database to create very personal messages. The result: three new orders, and continued loyalty.
Other loyalty building messages include birthday greetings, length of patronage, surveys and simple thank yous. Of course, one of the best loyalty building systems using the database is to act on expressed customer preferences. When a traveler finds the Wall Street Journal at his hotel room door in the morning, instead of the USA Today that everyone else gets, he knows the hotel chain is using its database to tell the local hotel staff Mr. Hughes' newspaper preference. How's that for loyalty building?
—Arthur Middleton Hughes, VP/Solutions Architect, KnowledgeBase Marketing
The first thing you should do is define loyalty. Some companies define it as successfully gaining additional purchases from their existing customers—they view getting the next purchase as an indication of loyaty. To achieve additional purchases, they increase the volume of marketing messages and increase discounts or offer a points program. This does not create true loyalty—it is really "bought loyalty."
There are many ways to build real loyalty—as opposed to bought loyalty—without discounting; and this is one are where the marketing database can be of great use. True loyalty comes from providing more personalized and responsive interactions, including marketing communications, sales contacts, customer service and web. However, personalized service and marketing will cost more to deliver, so it must be focused only on those customers who provide the potential to deliver an appropriate ROI in return.
Which approach to loyalty you use will drive how you analyze and segment your marketing database. If you are interested in driving additional purchases in the short term, RFM analysis and segmentation will suffice. If you want to identify your best customers and those with the most future potential, then more sophisticated modeling will be required. Finally, you will need to modigy your marketing database to enable more personalized communications. It needs to have a complete view of the customer's interactions with you—including web visits and customer service calls. Without that data you will have a distorted view of your customers and will not include and exclude the right customers from your loyalty efforts.
—Andy Cutler, chief strategy officer, BeNow
Send your tips and ideas to Lisa Yorgey Lester , managing editor, at email@example.com.