- Posted May 4, 2014 by
Customer Loyalty - Golden Rule Investment for Small Business
“Small business owners have little insight as to how good an investment a Customer Loyalty Retention strategy can be, especially within an established business”, claims Peter Wiedemann, Business Strategist from Lead Loyalty Marketing.
It is hard for business owners to change their ‘hole-in-the-bucket’ religion of seeking a never ending stream of new customers to pour down the funnel, only to see them leak out the bottom.
- Most business managers rate customer retention as critical to their survival.
- Many can even recite the golden rule that ‘it costs less to retain existing customers than to find new ones’.
- A few can even quote statistics such ‘on average increasing customer retention rates by 5% can increase profits by 25% to 95% 1
Yet in the same breath most are screaming they cannot afford to provide customers with more discounts, on top of their existing discounts, for Loyalty programs.
A common misconception in this cycle of discount marketing is that customers do not value anything else.
The ‘hook’ to keep customers returning can be sharpened many different ways. The concept of perceived value coupled with emotional triggers are a very powerful combination.
Providing ‘experiences’ such as head chef sitting down at your table full of invited friends, to sample his private stock, has far more loyalty depth and dimension, than ‘get 10% off your next visit, once you accumulate 2000 points’.
Small business has the ability to be creative and structure rewards around customer actions beneficial to them. Just make sure customers also perceive them as valuable and attainable.
Customers like to be appreciated and feel they are receiving special treatment, especially good customers. As cliche’ as it may sound, belonging to a special group is desirable.
The mass produced silver, gold and platinum clubs may have lost some of their lustre over the years, but they have proved themselves for decades. It may be time to spice up the allure, but the underlying human desire still runs deep.
Customer Retention and Loyalty Rewards programs have different roles to play. Customer Retention needs to be ingrained into the fabric of the business. If customer facing staff are unfriendly and unhelpful, then no amount of ‘points’ is going to keep customers coming back.
Most established small businesses are instinctively performing elements of retention. Usually it is a combination of factors such as good product, customer care, convenience and the many other customer valued ingredients essential for business survival.
However, it is hard for small business to gauge how much of each element is responsible for the repeat revenue pie, and even harder to work out how to improve on this.
This is where Loyalty Programs can be so valuable, as they boost the ability to retain customers through providing a structured, customer focal point and baseline from which to improve.
As a marketing investment they are low risk, low cost and when aligned to an achievable business strategy, have a high probability of remarkable success.
Program revenue is easily measured to determine financial benefits and they compile data on customer preferences, to further improve effectiveness.
Most Loyalty programs are outsourced or have a high degree of marketing automation, so little effort is required in the day to day operation of the program once setup.
By default Loyalty programs force regular business communications with customers and in turn provide the ability to receive customer feedback.
Data analysis and customer interaction provides business insight. Remarkably this insight has a way of seeping into other areas of the business. It could even provide ideas for new product lines or services to sell.
There are few marketing decisions warranting such an overwhelming case for action.
Of course it requires a little effort to make it work, but if the ethic is there, then so are the ‘rewards’.
Lead Loyalty Marlketing info www.Leadloyalty.biz/ulboa
1 "Zero Defections: Quality Comes to Services," Harvard Business Review, September-October 1990.