Sunday, 24 June 2018

Information and commentary for the small business banking industry

The value of customer loyalty programs

24 Oct

There’s an important difference between a satisfied customer and a loyal customer. A loyal customer is less likely to switch to another supplier, even in the face of discounts and special offers, while a satisfied customer is more likely to be lured away by promotions.

Customer loyalty also matters because targeting existing customers is easier and cheaper than targeting new ones. Additionally, loyal customers tend to buy more, and buy more regularly.

A business’s loyal customers provide a secure revenue stream and recommend them to others, increasing the value of the business, so it’s worth investing in customer loyalty.

When designing a customer loyalty program, first step is to learn as much about the different customer segments as possible. Find out what, when, and how customers buy, and use this information to improve the customer service experience. Identify the aspects of the business that encourage loyalty, and aim to duplicate them.

For example, if customers are loyal to the business owner, then it’s important for them to get out and meet customers and build their business profile and loyalty. If customers are loyal to the business brand, then advertise in the media, sponsor events and build the reputation of the business.

A good customer database and a strong database management system can add considerable value by helping record, organise and plan contact with customers. The ability to set up automatic emails and reminders to keep in contact makes it easier to implement a customer loyalty program.

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