Business
Why you’re failing at customer loyalty
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As customers are always looking to switch suppliers, you need to be ahead of the game due to the abundance of choice out there. Loyalty schemes are the most effective way to make sure customer’s stay with you and spend more money. If you want to build a loyal clientele, sometimes keeping the customer satisfied isn’t always enough. Just by your customers being satisfied, doesn’t mean they can’t take their business elsewhere for a better deal.
To increase loyalty, you need to recognise their needs and reward your best customers. A loyalty scheme is used as an incentive for your most valued customers.
The advantages of loyalty schemes
Loyalty schemes allow you to focus on your best customers and improve customer satisfaction levels.
Loyal customers + Incentives = More sales = More return (£).
By increasing loyalty, you can increase profitability and extend the amount of time customers spend with you.
Loyal customers can become your best promoters, they can recommend you to others, which in turn saves you marketing costs. A loyal customer’s gratification is more influential to people than any advertising campaign.
Planning the right loyalty scheme
Loyalty schemes are popular for customers because they feel they are getting something extra when they are buying your product/service, which is why you should offer customers something they will want. However, it should also be planned with profit in mind.
Think about what you want the customer to buy. For example:
What do you want to achieve out of this?
Are you looking for return customers?
Do you want your customers to spend more?
Do you want them to promote your business?
The rewards you offer to customers can vary from fixed discounts to extra goods or prizes. There are lots of different ways you can offer your customers incentives. Here is a list of ideas:
- Stamp scheme – Very popular with companies in the hospitality, transport, telecommunication and entertainment sectors. For every purchase, you get a ‘stamp’ and at the end of the card, you get the last product for free/discounted.
- Discount for bulk orders – If you have noticed some customers are buying your product/service in bulk, why not offer them a bulk discount for example if they buy 10 they get 20% off the order.
- Point system – This is another popular loyalty program for frequent customers to earn points, which they can use to buy products with at a discounted rate.
- Customer referral program – For every person, they get to sign up/ buy a product they get a discount on other products. This helps your brand awareness and also helps you get new customers.
- Become a VIP – Having a choice for customers to pay a price per month/annually for a VIP experience will make them feel important with VIP-only incentives and rewards. It can also make it easier for purchases and beneficial for both business and customer.
- Partnering with another company – This can help provide all-inclusive offers and is effective for new and returning customers and growing your company.
How loyalty programs fail
Most existing loyalty programs are unsuccessful because they fail to meet their objectives. You should address the issues before they become a problem. After this, you will be ready to build an effective base of loyal customers.
- Confusing loyalty scheme
- Difficulty in earning rewards
- No promotion and awareness
- Get smart
- No Data, big problem
Getting to know your customers
A loyalty scheme can generate a lot of data and used to improve your business. Loyalty programmes show your customer behaviour and can show who are your best and your worst clients. This will help you when you are planning and organise your loyalty scheme to fit around your customers.
Your best customers will be bringing in a lot of your profit however, your worst customers who spend little and buy discounted goods – can cost you money. This is where your loyalty scheme can improve this, by rewarding the customers who spend more with better discount rates and encourage smaller spenders to buy more products. For example, if they can have 10% off when they spend over £30 or 20% off when they spend over £55.
Final Note:
Loyalty schemes help to win back one-time customers. The data created by a loyalty scheme can offer valuable information. This makes customers easier to win over because you know everything about them including their buying history and where and how to reach them. This information can also show you where you are going wrong and help you improve your product range and stock selection. Make a note to check out your competition, they are either already offering their customer rewards, or planning to. Your loyalty program should keep you ahead of the competition and retain your best customers. Most loyalty programs fail because there is no set plan. Planning is important because you should address any issues you come across before they become a problem. Having an effective loyalty program will help retain existing customers and also bring forward new customers.