Customer Loyalty and Retention Programs are Keys to Long-Term Success
Turning leads into customers who are willing to pay for your product or service can be expensive and time-consuming. So, once you acquire them it’s important to do everything possible to keep them. One way to do that is to implement a loyalty program that helps customers feel valued and appreciated.
Customer loyalty programs focus on establishing solid relationships with customers and rewarding them for their repeat business with such incentives as coupons or free merchandise. One example is CVS’s Extra Care program. In it, customers can earn two percent back on most purchases, paid out quarterly. They can also earn additional rewards for being a member of its Extra Care Pharmacy & Healthy Rewards program. Another company that offers a robust rewards program is Starbucks. Stars are gained for every purchase and once a certain star level is attained there are many perks, including a free birthday drink and a free item after you collect a certain number of stars.
But why go to such costly lengths to foster loyalty among customers? Simply put, selling to existing customers is a whole lot cheaper than finding new ones. Research from HubSpot calculates the cost of acquiring a new customer at five-to-ten times more than selling to an existing customer. They also report current customers spend 67 percent more than new customers. It’s easy to see why loyalty programs are an integral part of so many strategic marketing plans.
Nanci Roth, a McKinley Marketing Partners’ consultant who specializes in loyalty and retention programs, says customer loyalty boils down to how customers feel about a brand or a specific company. “It’s a deeper connection than retention. Keep customers happy and engaged because it’s all about your core customers for the long haul,” she adds.
Customers must have a connection in some way – whether price, proximity or value – and Roth feels loyalty can exist with or without a specific price point because people can be loyal to a brand even if they can’t afford it on a regular basis. For example, if someone is loyal to a specific clothing designer’s brand they may save up and splurge on an item occasionally.
As for value, customers must feel like they are getting their money’s worth. If so, they will come back. Psychology also plays into it. Some people will pay more for a luxury brand simply because of their personal connection to it and how it makes them feel to own an item with a certain label on it.
Proximity also plays an important role in loyalty. A corner grocery store may have loyal customers simply because of its location. But it can strengthen its relationship with customers by offering special discounts, coupons and freebies.
Proximity also comes into play for companies that are located online. For example, a customer may not live in New York City but they can still subscribe to the New York Times via a digital subscription. Incidentally, the Times Insider provides extra value to patrons by giving them a behind-the-scenes look at how news stories come together.
Roth offers these tips for companies creating loyalty programs:
- Think about what your customers want and their values, create a program for them and use messaging that will capture their attention in your marketing emails and on your social media channels
- Engage with your customers in person and online to build lasting relationships
- Thank you goes a long way; provide a service but also acknowledge customers to make them feel special and valued
- Always deliver on your promises
The goal is to keep as many customers as you can, for as long as you can since satisfied customers tend to spend more and are more likely to share their positive experiences with others. Loyal customers can act as brand ambassadors as they tell others how great your products or services are. This word-of-mouth marketing is a powerful tool because people listen to others they already know and trust. But it can also have a negative impact if you receive too many bad reviews and complaints on social media and on third-party review sites.
There are things you can do to help increase your customer retention rate. Entrepreneur offers these tips:
- Manage customers’ expectations of your company and your brand
- Deliver more than you promised by possibly adding in a special discount
- Stay transparent by proactively addressing issues and complaints
- Encourage loyalty by giving them a reason to stay with your brand
- Stay top of mind through regular e-newsletters, or blog and social media posts
- Prove your value by focusing on measurable results
- Change – strive to do more for your customers and evolve over time
- Conduct regular surveys and ask for feedback from customers
Establishing trust and building relationships are key to customer loyalty and retention. By implementing a robust loyalty program, you will have a better chance of retaining customers. The bottom line is this, be open and honest in your communications, provide exceptional customer service and make sure your customers feel valued and engaged. By taking the time to develop and implement a proper marketing strategy around your loyalty program you will be on your way to long-term success.
If you’re looking for a consultant who specializes in customer loyalty programs and retention, contact us today.