Learn 10 Strategies to Increase Returns and Build Profitable Customer Relationships. During the lean times and beyond, smart marketers will use these tough economic times to revisit their strategies to become more efficient and results-focused than ever. Customer Insight Group, Inc.’s white paper, 10 Critical Factors for Building Profitable Customer Loyalty, provides ten strategies marketers can put in place immediately to improve repeat purchases and build long-term customer loyalty.

1. 10 Critical Factors to
Building Profitable Customer Loyalty …
and why you
have to do it,
even (or especially)
in a recession!
s
o the economy is bad. marketing costs and increased Institute, 91% of unhappy
You still have choices. You sales — not too shabby an customers will never buy again
could slash your marketing outcome in any economy from a company that has
budget across the board, cutting displeased them and will also
If you choose to go this route,
both profitable and unprofitable voice their dissatisfaction to at
common sense, experience and
programs by an equal amount. least seven other people.
statistics are on your side.
Yes, it cuts costs — but it also According to the Customer service the good news: growth rates soar
makes a smaller company. or Institute, it costs five times as for those who are adept at loyalty.
you could stop marketing entirely much to attract a new customer Frederick reicheld, author of The
— a survival technique that’s the as it does to keep an existing one Loyalty Effect and Loyalty Rules,
business equivalent of lying down satisfied. A study by marketing found that loyalty leaders grow on
on the highway waiting for the metrics found the average average more that twice as fast as
next semi. company has a 60-70% proba- the industry average across a
or — smart you — you could bility of selling again to existing wide variety of industries.
decide to take action and stack customers, a 20-40% probability
so — since I suspect I’m preaching
the odds in your favor. You could of successfully selling to lapsed
to the choir here — most of us
decide to focus your newly customers — but only a 5-20%
agree that loyalty marketing pays
limited resources on the area chance of selling to a prospect.
off, but it’s the how that trips up
most companies.
t h e a v e r a g e c o m p a n y h a s a 60-70% p r o b a b i l i t y our experience shows that there
of selling again to existing customers, but are ten critical success factors
o n ly a 5 -20% c h a n c e o f s e l l i n g t o a p r o s p e c t . to cultivating profitable customer
relationships.
of greatest opportunity: your Losing a customer? that’s where
existing customers, specifically it gets really expensive. According Leverage Your Data
those who have high growth to studies by the technical As Bill gates said in Business
potential. the result is lower Assistance research programs @ The Speed of Thought, “the
|| ©2010 Customer InsIght group, InC. ph: 303.422.9758 www.CustomerInsIghtgroup.Com

2. best way to put distance between but unclear objectives. woefully, profile should be a 360-degree
you and the crowd is to do an this oversight can sabotage view, combining purchase
outstanding job with information. your program from the start. A behavior, attitudes, satisfaction,
how you gather, manage and program cannot be offered to the demographics and lifestyles.
use information will determine masses and exclusive, loaded once you’ve created the loyalty
whether you win or lose.” with benefits and cheap. segments, prioritize them to
focus on their potential economic
Successful loyalty programs so, develop program objectives
impact. Avoid rewarding “free
leverage customer insight to: based on your primary business
riders” — loyalty members who
Attract profitable customers. objectives. Do you want to
join your program but give you
expand marketing channels with
Determine allocation of nothing in return, and instead
resources to improve ROI. direct capabilities to improve effi-
focus your efforts on profitable,
ciency and measure results? Do
Evaluate how specific customers loyal customers.
react to specific promotions. you want to collect data to be
leveraged as a core business
Deflect competitive challenges.
asset? Do you want to build
make rewards realistic
Identify trends opportunities.
strong relationships with high Any incentive you offer must be
Increase customer conversion realistically attainable within
value and high growth customer
rates.
segments? You decide — but you a reasonable time period. By
Yeah, data can do all this. design, a loyalty program is a
have to decide.
balancing act between offering
Create a shared Vision Ask Customers some low-cost, easily attainable
In a true customer-centric orga- short-term rewards that can be
what they want
nization, the vision has to be redeemed early in the program
If you want to know what will
clear and — equally important and more highly valued aspira-
make customers more loyal
— embraced at all levels by all tional (and more costly) rewards
— ask them. Focus on the
employees. some key concepts: that can be redeemed later in the
features, program structure
Over-invest in coordination program. while the short-term
and rewards they would add or
across all functions. Make sure rewards encourage enrollment
remove if they were to (re)design
everyone understands program and ongoing participation, the
objectives, strategies, areas of your loyalty program. Compare
beau ideal rewards serve as an
departmental impact and asso- the benefits they want with the
incentive for your customers to
ciated expenditures. benefits they’re getting. Based
consolidate purchases and award
ncourage employees to par-
E on your customers’ feedback,
ticipate in the program as cus- you greater share of wallet.
determine the business impact of
tomers so they experience first- the requested benefits. Is it finan-
hand the program’s value.
cially viable to give them what Create a Distinctive
reate high-level positions with
C they ask for and does it ultimately Customer experience
the sole purpose of leveraging
achieve your business objectives? while some customers are moved
customer data across the
organization and serving as by price, others want personal
the customer advocate. Know Your Customers attention and convenience. Your
Encourage employees to think Look at the customer from customers are diverse; conse-
like a customer. a holistic perspective, then quently, your program needs to
Incorporate customer focus segment customers that are acknowledge their uniqueness
into training and hiring. similar. Create a loyalty profile by speaking differently to each
by ranking customers according segment. the better you under-
set realistic goals to their value to your company, stand your customers, the better
sometimes loyalty programs are and then differentiate them by you can push the most appropriate
developed with good intentions, their life cycle and needs. the levers for the specific customer.
|2| ©2010 Customer InsIght group, InC. ph: 303.422.9758 www.CustomerInsIghtgroup.Com

3. Integrate concise, relevant and compelling Value indicates the profitability
messages that build relationships of the customer; a decline in
A loyalty program is not a silver
based on your customers’ needs. value can represent a decrease
bullet to solve a company’s core
weakness. You can’t manufac- the key to success is to embed in transaction size and your share
ture loyalty if you offer shoddy your loyalty program into the total of wallet. measuring value is
products, poor customer service, customer experience. more than looking at one transac-
noncompetitive prices, or non- tion; instead it is a measurement
integrated distribution channels, measure success of your customer’s perceived
or if you don’t communicate with Customer satisfaction and loyalty value in the relationship.
customers. Instead, a loyalty metrics should be prominent in As Frederick reicheld explains
program should be thought of as performance dashboards and in The Loyalty Effect, “Creating
a part of your integrated customer visible to the company’s lead- value for customers builds loyalty
relationship-marketing program ership, including the Board of and loyalty in turn builds growth,
— one that helps you to proactively Directors. You should measure profits and more value.” rFV
manage the customer life cycle. results in both the short- and provides you actionable measure
Be relevant
“creating value for customers builds loyalty loyalty
Depending on your business,
in turn builds growth, profits and more value.”
customer touch points may
include mail, telephone, fax,
text message, e-mail, instant the long-term. while short-term for enhancing and refining your
messaging, chat rooms, catalogs, success is measured by evalu- loyalty program.
point-of-sale, signage, web sites, ating the results of promotions,
events and customer commu- no matter what the economy is
online bulletin boards, and what-
ever was invented last week. new nication, long-term success is doing, the quest for loyalty offers
forays in Internet-based systems measured by RFV — recency, bottom-line rewards for those
include blogs, video conferencing, frequency and value. who prevail. As unique as your
podcasts and meeting-sharing customers are, so will be your
Recency is the measurement challenges and successes as you
systems. each touch point
of when the customer last build and refine your program
has its own cost implications,
purchased. generally it is a good along the way. the pursuit for
and perceived benefits to your
indicator of potential defection.
customer. In developing your customer insight shouldn’t be
customer communication plan, Frequency is a measure of how taken lightly or without long-term
leverage each touch point to often a customer purchases; it dedication. Dig in. Dedicate for
reinforce the value proposition gauges how robust the relation- the long haul and discover that,
and focus on what really matters ship is between your customer recession or not, there’s gold in
to your customer — creating and the company. them thar customers.
about the author:
Sallie Burnett is the president of Customer Insight
Group, Inc., a strategic marketing company
that helps companies improve the return on
their marketing investment by developing and
executing high-performing acquisition, loyalty,
upgrade and retention programs. Explore how 671 Secrest Circle
1
Arvada, CO 80007
Customer Insight Group can help you increase ph: 303.422.9758
sales and build profitable customer relationships www.customerinsightgroup.com
by visiting www.customerinsightgroup.com sallie@customerinsightgroup.com
|| ©2010 Customer InsIght group, InC. ph: 303.422.9758 www.CustomerInsIghtgroup.Com