Customer Loyalty Programs Should Be Overhauled

Most businesses understand the enormous value associated with loyal clients.  That’s why businesses of every size and form have implemented loyalty programs to keep their clients.  Unfortunately, these days this conventional loyalty model has grown tired and provides differentiation in the industry.  As a result, it’s time to revamp these programs.

Flooding The Marketplace 

Regrettably, for many businesses, any advantage that was originally gained through faithful programs has quickly eroded.  While airline, hotel, and car rental agencies were the leaders of mainstream loyalty plans, other businesses were quick to leap the loyalty program.  The outcome is really a business environment where every restaurant, gas station and also pet shop has some type of program or loyalty card.

Consequently, having a loyalty program is no longer a competitive differentiator.  It is now a mainstay of a business environment in which loyalty applications have become a product and a possible detractor to the customer experience.  They get in the means of business efficiency – requiring another step.  They have become nothing more than another solution.  Loyalty programs may also produce disdain for customers that can’t obtain the benefits of pricing provided exclusively to program associates.

Rethinking The Loyalty Program

If businesses want to reap the benefits of true customer loyalty – it’s time to rethink what client loyalty actually means.  Client loyalty, based on Cornerstone Credit Services,  is not obtained by holding a card, accumulating points, or redeeming rewards.  What’s more, client longevity, frequency, or buy volume can not measures simply loyalty.  Customer loyalty is not a one-way street; it can’t be determined based on what the customer has done for the company.

Rather, customer loyalty ought to be turned upside down.  Perhaps firms might get it right if they measured loyalty concerning the level to which the provider is loyal to the customer rather than vice versa.  Treat them unique, address them as people, call them by their name, and companies should aim to remember repeat customers.

Consider the easy lesson of consumer loyalty which was demonstrated each week on the 1980’s sitcom “Cheers”, the bar where everyone knows your name: At the beginning of each show, the bar’s best client,’Norm’, would enter the bar and move to ‘his’ barstool.  There was no loyalty program, no card scan, without a ‘platinum’ amount required to obtain entrance.  Everyone indeed knew his name had his seat in the pub and the bar owner knew exactly what he needed to drink.  ‘Norm’ was loyal, but the establishment was extremely loyal to him.

Individual customer loyalty is a simple concept that is frequently overlooked in today’s business environment comprised of multiple touchpoints, channels, and markets.  When businesses get big and complicated, the client becomes nothing more than a human body a number, or even an inconvenient product.  When that occurs, it gets increasingly difficult to treat clients. 

With the overabundance of loyalty applications now that offer nothing more than price reductions, it’s no wonder that clients are getting to be decreasingly loyal to any 1 brand.

With so much at stake, it’s time to rethink customer loyalty.

Steps To An Effective Customer Loyalty Program

Wider organizations are becoming dissatisfied with their customer satisfaction surveys and turning instead to designing and executing customer loyalty applications.  The main reason is simple, after 10 years of running client satisfaction surveys the American Customer Satisfaction Index has, basically, not moved at all.  That is despite industry reportedly investing USD800,000,000 each year on improving client satisfaction.  

Step 1: Connect customer loyalty to business results 

Prior to making any investment, you want to understand what the potential returns are going to be.  The center of Step 1 is linking your business goals (revenue, profit, market share, growth( whatever) to fluctuations in customer loyalty.

This way you exhibit the benefits as well as the expenses of your customer loyalty programs when you introduce them to your own management.

Start by taking your key business measurements and connect them to fluctuations in customer loyalty.  If customer loyalty were to increase by 10% how much could profit rise?  It is possible to download our free tool to create this task simple or create your own.

Step 2: Locate a loyalty indicator

Whilst customer satisfaction polls are measuring satisfaction at finer and finer levels it’s becoming obvious that, as a metric, client satisfaction isn’t a very reliable measure of devotion.  Customer satisfaction surveys were always designed to be customer loyalty marketing surveys but they’re in fact no such thing.

Research is now revealing that depending upon your business, unless your customer scores you at the “top box” on your customer satisfaction surveys, i.e. 5 out of 5 they have small real loyalty to your organization.  Let’s face customer satisfaction is table stakes –you’ve got to perform to keep them loyal.

However, a recent study (1) has proven that there is one question, the answer to which is a fantastic indicator of consumer loyalty.  That issue is “How likely would you be to recommend us to a friend or colleague”.  

Step 3: Describe the drivers of customer loyalty

Every business has a range of attributes that may impact customer loyalty.  If you are in fiscal service it might be areas like service charges, line lengths in branches, product characteristics, etc..  If your business is physical merchandise they might be delivery times, inventory holdings, and order quantities.

Beginning with the one question above, add questions about these distinct potential drivers of customer loyalty to customer loyalty marketing surveys.  Do not add too many.  Maybe 15 or 10 and make certain you employ a rating scale to collect the client’s perception of your operation.

Now comes the most important part: find someone to perform some reasonably statistical analysis of your results to ascertain which of these drivers are most important in terms of customer loyalty.  There are a couple of unique techniques but correlation and regression analysis would be the most common.

Step 4: Implement your client loyalty programs

You have the very important information that you need: you understand the condition of customer loyalty and you know which your business attributes are most important to that loyalty.

Start by focusing on just some of the most important drivers that you also believe you could alter and get started making changes in your business.

Perhaps you have found that line lengths on 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.  Make sure you align staff payment plans and bonuses so that the modifications you make will be permanent.

Once you’ve improved the most crucial areas proceed to people that are less significant.

Step 5: Re-survey your customers

Remember the goal is to improve customer loyalty.  Marketing surveys repeated at regular periods will inform you how you’re customer loyalty programs do on customer loyalty drivers and both customer loyalty that you’ve identified.