Customer Loyalty: Why you shoud care
Let’s be sure we have a mutual understanding of what customer loyalty is and isn’t. It isn’t simply a rewards program. Rewards are a component of a program but not the sole focus. A well thought out loyalty program is integrated with your POS system and collects customer purchase data. The gold of POS system is inventory history and customer purchase history. The goal of customer data is to design and intelligent marketing program using customer data which allows you foster better customer relationships, increase the LTV ( life time value of a customer), drive incremental sales and recognize at risk customers before they abandon you.
In simple terms you should care because if you’re not paying attention to your customers your competition is, especially with the growth of social media. The average store loses 30% of their customers every year according to Frederick Reichheld the author of ” The Loyaly Effect”. In my opinion this is a must read for anyone who wants to understand why a customer program is essential to your bottom line.
The payoff of Loyal Customers:
- A customer’s value increases over time
- Lower acquisition cost of new customers
- A customer’s spending accelerates over time
- They help give you product certainly – you know who you’re buying for.
- They refer customers like themselves
- They are less price sensitive.
referral from an existing customer is the number one “influencer” is helping people determine who they want to do business with. The last three big purchases I made were all from stores or vendors who were recommended by trusted friends.
In Wednesday’s post I will discuss how to design and execute a loyalty program.