June 14, 2011
Loyalty Marketing : The Slam-dunk Approach to CRM
Customer loyalty programs are an indispensable part of customer relationship management. You can use CRM systems to measure the success that your loyalty programs are having, but ultimately it’s a combination of data interpretation and strategy implementation that will drive increased business.
CRM experts are always quick to remind us of the importance of loyalty marketing. For example, did you know that:
- The majority of a company’s business is generated from a small percentage of repeat customers. This fact serves to underline the importance of retaining customers and offering them incentive to come back again.
- It’s far cheaper to retain an existing customer than it is to earn a new one. The figures are actually incredibly eye-opening. For every dollar that you spend on promoting loyalty programs for existing customers, you’ll spend as much as $5 to $10 in advertising efforts to bring in a new customer.
- Dissatisfied customers like to talk. On average, they’ll tell as many as 22 people if they’ve had a negative experience—whereas a satisfied customer will only tell an average of nine people when they’ve had a positive experience. This still bodes well for companies that place heavy emphasis on ensuring customer satisfaction, but bodes poorly for those that don’t.
Tips on Setting Up a Loyalty Program
When tossing around ideas for creating a loyalty program, consider the following ideas.
- You can keep your loyalty program on a small scale and a potentially highly profitable level by only offering the program to customers that spend a certain amount of money on a regular basis. This accomplishes two things: it rewards people who spend a lot of money with you, and it encourages people to spend more. The only drawback to this is that it could leave a bad taste in the mouths of loyal customers who’ll feel cut out because they don’t spend enough money with you.
- Offer customers the chance to opt in to your email marketing list or direct mail marketing list. This will allow you to send notification of upcoming sales or coupons for discounted services, and will also give you the opportunity to track your success rate on various marketing campaigns by using CRM systems or software tracking programs.
- Create membership cards that customers can sign up for which will track their purchases and offer significant discounts when they spend a certain amount of money. This type of loyalty program will cost you little to nothing to operate, and could result in greatly increased sales which will offset the amount of discounts or freebies you’ll be giving away.
You can learn a lot more about customer relationship management and get a crash course on the topic by attending a loyalty marketing seminar at the upcoming DMA2011 Conference & Exhibition in Boston. By doing so, you’ll get far greater detail and an expert’s insight on what it takes to create the ultimate loyalty rewards program, and how to use it to not only drive sales but to bring in new customers.
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