According to the findings of the Harvard Business School, an increase in customer retention rates by 5 percent enhances profit by 25 percent to 95 percent. And it is true that a business must reward their customers every time they do business with them because this encourages their customers to repeat their business. Improving your customer retention has the potential of increasing your overall profit and Customer Loyalty Programs are an effective way to hold your customers to your business. You offer your valuable customers something that encourages them to stay connected with your brand. Small business owners have understood this concept very well and slowly they are turning their heads to implementing Customer Loyalty Management Software.
An understanding of your customer’s mindset and plan a program that capitalizes on that is an absolute must. If the goal of your Customer Loyalty Program is solely for the purpose of revenue, it cannot be classified as a loyalty program. Customer Loyalty Management Software should be focused on ensuring long term commitment of customers. Hence, you shouldn’t be thinking in terms of immediate gratification. Some business owners fail to understand this concept and result – failure of Loyalty Programme.
Not all customers are the same. While some are likely already loyal, others are new to your business. Businesses target every customer equally, even though the customer’s needs and motivations are very different. Hence, it is very essential to understand that your business should differentiate with various types of customers.
Here are 7 Customer Loyalty Programmes that you should be adopting after understanding your customers:
- Keep Simple Point Redemption system
Point accumulation is one of the most common loyalty program methodologies. Under this system, the loyal customers earn points for purchases which then translate into some kind of rewards such as Voucher or Discount. Create a structure that rewards users after they complete specific actions. As customers accumulate points and redeem rewards, they only get more interested in your brand. CLM management software can help you identify how your customers can collect points and redeem them with rewards.
However, the more complex point Redemption system is – the harder it is for your customers. Apart from making the points system easy for customers to sign up, you should keep a points-based loyalty program simple and straightforward because confusing conversion systems can lead to loss of customers.
- Implement Tiered Programs to reward initial loyalty
Tiered Loyalty Programs offer different rewards based on which tier a customer is in. In order to be a part of the next tier a customer must achieve the milestones set with the previous tier. Tiered Loyalty Programs makes good sense as they have the potential of bringing customers to make return to your business more often. Every time your customer moves up a tier they get access to more benefits. A tiered system allows customers to extract both short-term and long-term value from the loyalty program. This programme encourages customers to shift themselves to the next tire and as the result you can clearly see the increase in the sales.
- Upfront Fees can work for VIP Clients
A Customer Loyalty Program does not need to be free every time. Sometimes your business can charge an upfront fee for access to exclusive benefits meant for VIP clients. In fact, charging consumers a fee to be part of your loyalty program can work wonders for your business. This will make the VIP customers feel special by virtue of being a part of the club. This will entice the customers to keep coming back for more. By noticing this psychology, you can add valuable customers to your base which will stick for a long long time.
- Structure non-monetary rewards
Sometime Consumers may find value in non-monetary programs. While cash rewards are more traditional and used commonly by businesses to boost short-term sales, research has shown that offering non-cash incentives – such as a free gift with purchase, is a great way to boost your program’s customer engagement. For ex. A renowned online gift shopping site offers free designer birthday gift packaging or birthday card. When it comes to purchase intention and brand equity, non-monetary rewards outperform discount based promotions on both counts.
With so many competing Customer Loyalty Programs out there for each industry, giving your customers a good value for their spending is an absolute must. This can be done by partnering with other businesses for the rewards you offer in your program. By partnering with another business, you can offer a higher value reward for less money – the company you negotiate with will offer you their goods and/or services at a highly discounted rate in exchange for the PR value and visibility you will be giving them by offering their wares. For ex. A well known mobile wallet brand offers tie ups with many restaurants. This encourages customers to use both, the mobile wallet and restaurant.
- Giving up on Loyalty Programs altogether
With all the complexity associated with implementing a good Loyalty Program, some marketers are not averse to the idea of giving up on Loyalty Programs altogether. On the other hands they offer a basic rewards program that just gives out benefits with every purchase. If your business is launching a new service or product, you may do without a Customer Loyalty Program. If your offerings are spectacular, customers will be automatically loyal.
- Having a multipronged strategy to win back customers
It’s utterly out of question for businesses to talk to every customer that comes to them. This is true for those with multi-location businesses. Hence it is an absolute must to have a Customer Loyalty Management Software that identifies your top customers. Any CLM & human resource software should include a good database generation system that allows a business to have access to updated and reliable information about their employee / customers. Using multiple strategies at the same time can give you huge pool of customers.
Companies are increasingly focusing on their core, organizing their business network for higher efficiency and lower risk for sustainable growth through strategic investments in Customer Loyalty Software. The world of customer loyalty is changing fast. It is in fitness of things that you should adapt and build a stronger bond with your customers. Though, it is expensive to build customer loyalty, the cost of not doing it is even greater.
Customer service seeks to acquire new customers, retain existing customers, provide superior customer satisfaction, and consequently builds customer loyalty. Effective Customer Loyalty Programs are driven by creating value for your customers by offering meaningful and motivating rewards. There are many vendors that have expertise in delivering data-driven Customer Loyalty Programs for various industry sectors.