Most businesses understand the enormous value associated with clients. That is why businesses of every size and form have implemented loyalty applications to maintain their clients coming back again and again. Sadly, this loyalty model provides very little differentiation in the industry today and has grown tired. Because of this, it’s time.
Flooding The Market
Unfortunately for most businesses, any benefit that was initially obtained through faithful programs has quickly eroded. While airline, hotel, and car rental agencies were the leaders of mainstream loyalty programs businesses were quick to jump on the loyalty program. The result is a business environment where every restaurant, gas station and pet shop has some form of devotion card or program.
Consequently, having a loyalty program is no longer a competitive differentiator. It has become a mainstay of a business environment where loyalty applications have become a product and a possible detractor to the general customer experience. They get in the means of business efficiency – often necessitating another step in the customer experience process. They’ve become nothing more than another way. Loyalty programs may also produce disdain for customers that can not receive the benefits of special pricing provided exclusively to program members.
Rethinking The Loyalty Program
If companies want to reap the benefits of accurate customer loyalty – it’s time to reevaluate what client loyalty actually means. Customer loyalty, according to Cornerstone Credit Services, is not obtained amassing points by simply holding a card, or redeeming rewards. What’s more, loyalty can’t be measured simply frequency by client longevity, or purchase quantity. Customer loyalty isn’t a one-way road; it cannot be determined only based on what the customer has done for the company.
Instead, customer loyalty ought to be turned upside down. More firms would get it right if they measured loyalty concerning the degree to which the COMPANY is loyal to the client rather than vice versa. Address them as people, companies should aim to recall repeat customers, call them and then treat them unique.
Consider the simple lesson of consumer loyalty that was exhibited each week around the 1980’s sitcom “Cheers”, the bar where everyone knows your title: At the beginning of each show, the pub’s best client,’Norm’, could enter the bar and proceed to ‘his’ barstool. There was no loyalty program, no card scan, without a ‘platinum’ amount needed to obtain entry. His name was indeed known by everyone, he had his very own chair at the pub and the bar owner knew precisely what he wanted to drink. ‘Norm’ was loyal, however, the establishment was faithful to him too.
Individual client loyalty is a very simple concept that’s frequently overlooked in today’s business environment comprised of multiple touchpoints, channels, and markets. When businesses get big and complex, the customer becomes nothing more than a human body, the usual number, or even an inconvenient commodity. When that occurs, it becomes increasingly hard to treat genuinely loyal clients differently.
With the overabundance of loyalty programs today that provide nothing more than price discounts, it’s no surprise that customers are getting to be decreasingly loyal to any one brand.
With so much at stake, it is time to rethink customer devotion.
Steps For A Successful Customer Loyalty Program
Increasingly organizations have become dissatisfied with their customer satisfaction surveys and turning instead to designing and executing customer loyalty applications. After 10 decades of running nationwide client satisfaction polls, the American Customer Satisfaction Index has, basically, not moved in any way, the reason is simple. This is despite industry supposedly investing USD800,000,000 every year on enhancing customer satisfaction.
Step 1: Link customer devotion to business results
Prior to making any investment, you need to know what the prospective returns are going to be. The center of Measure 1 is linking your business goals (earnings, profit, market share, expansion ( whatever) to changes in customer loyalty.
This way you exhibit the benefits as well as the costs of your client loyalty programs when you present them to your management.
Start by choosing your key business measurements and link them to fluctuations in customer loyalty. If consumer loyalty were to increase by 10% how much could profit increase? It is possible to download our free tool to produce your own or to make this task easy.
Step 2 Find a loyalty indicator
While client satisfaction polls are measuring satisfaction at finer and finer levels it’s becoming clear that, as a metric, client satisfaction is not a very reliable measure of loyalty. Customer satisfaction surveys were always intended to be customer loyalty marketing surveys but they are in fact no such thing.
Research is now showing that, depending on your industry, unless your customer scores you in the “top box” on your customer satisfaction polls, i.e. 5 from 5 they have small actual loyalty to your own organization. Let us face customer satisfaction is table stakes –you’ve got to do better to keep them faithful.
However, a recent study (1) has proven that there is one question, the answer to that is a good indicator of customer loyalty. That issue is “How likely would you be to recommend us to a friend or colleague”.
Step 3: Identify the drivers of customer loyalty
Every business has a selection of attributes that may impact consumer loyalty. If you’re in financial service it might be areas like service fees, line lengths in branches, merchandise characteristics, etc.. If your business is physical merchandise they might be shipping times, inventory holdings, and purchase amounts.
Starting with the 1 question previously, add questions about these different potential drivers of customer loyalty to client loyalty marketing surveys. Don’t add a lot of. Perhaps 10 or 15 and be certain you employ a rating scale to accumulate the client’s perception of your performance.
Now comes the main part: find somebody to do some reasonably statistical evaluation of your results to determine which of the motorists are most important in terms of consumer loyalty. Regression and correlation analysis would be the most common although there are a few unique techniques.
Step 4: Implement your customer loyalty programs
You have the vital information which you want: you understand the state of customer loyalty and you know which of your business characteristics are most important to that loyalty.
Start by focusing on just a few of the most significant drivers that you also believe you can alter and get started making changes in your business.
Perhaps you’ve found that line lengths in your branches are a key driver of customer loyalty. Work with your employees to identify ways to change your business processes and reduce line spans. Be certain you align staff compensation strategies and bonuses so that they will be permanent.
As soon as you’ve enhanced the most crucial areas move on to people who are less significant.
Step 5: Re-survey your customers
Remember that the purpose is to improve customer loyalty. Marketing surveys repeated at regular intervals will let you know how you are customer loyalty programs do on both the client loyalty and customer loyalty drivers that you have identified.