Executive Report
Rewarding loyal customers is one strategy for successful customer relationship management (CRM.) Done correctly, loyalty incentives can be used throughout the customer purchasing lifecycle. Not all customers are loyal, so it is recommended that you first sort customers before placing them in a loyalty program. Placing customers in different groups allows for incentives to be created that appeal to one group more than others. CC&A Strategic Media can guide you through this prep work, then you can start using loyalty programs where appropriate.
Existing Customers
This group will gravitate toward loyalty programs, because they are more likely to purchase from the company again if they know they will earn points to get free merchandise or can turn them in for bigger rewards like trips and gift cards. The company can use the data collected on these customers to meet more of their needs in the future.
New Customers
A loyalty program for this group can entice them to make a first-time purchase if the incentive is exciting enough. This can be a more-expensive undertaking, and should be evaluated to see if the cost-to-profit ratio warrants the continuation of the program.
Unprofitable Customers
These are customers who only purchase discounted items, resulting in little to no profit gains. A loyalty program can be designed to reward certain customer groups and eliminate others, leaving bad customers with little reason to remain with the company.
Customer loyalty programs are used to positively impact business in four ways:
- Boosting Sales: Studies show companies that want to grow their businesses find loyalty programs to be the easiest way to achieve their goals.
- Improving Reputation: They keep new customers around after making a purchase, and existing customers continue to feel valued.
- Providing Market Research: By conducting a loyalty program, you will be collecting data about what kinds of rewards work best for different groups of customers. You will soon see a pattern and quickly be able to design specific gifts for your most valued customers.
- Not Necessarily Expensive: Research shows that it is seven times less expensive to retain an existing customer than it is to attract a new one. Based on this, companies may want to reconsider allocating money toward an incentive-based program.
CC&A Strategic Media can help you reach the customers you want and avoid wasting resources on those you don’t.
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