Increasing customer loyalty to the company should be the primary objective of any manager in today’s increasingly competitive environment.
Every company relies mainly on its fixed customers and endeavors to increase the number of such clients. Loyal customers are not customers of the company because there is nowhere else to buy the same or similar product or service, but because they are satisfied with the quality, the price of the product and the attitudes of traders aimed at satisfying their needs.
The main goal of customer loyalty programs is to retain customers that have shopped with the merchant once or several times. The main reason clients continue to come back is not the amount of discounts they get as much as the trust between the merchant and the customer.
The creation of a relationship of trust is very important to build long term partnerships with customers and absolutely necessary for successful implementation of sales. So far only the bigger companies used to create loyalty programs because of the intensity of competition in their industries and the great struggle for every customer. Customers got accustomed to the attention that they get from large corporations and now expect similar respect from other suppliers of goods and services.
In many cases the regular customers become loyal. Loyalty programs make them even more satisfied because they enjoy better conditions for shopping, as a testimony of gratitude from the company for good cooperation. The improved conditions can be expressed as: providing lower prices, special treatment, preferential discounts, gifts and other additional services.
How do you work to build the loyalty of your customers?
Answering the following questions will help you determine what is the effectiveness of your approach to build and maintain the loyalty of your customers:
• Do you put in more efforts to sell more to existing customers than new ones?
• Is one of your main priorities maintaining and developing the relationship with your current customers?
• Are you aware of the degree of satisfaction of your customers from the products or services you provide them?
• Do you consider the needs of your customers when developing new products?
• Do you manage to keep your current customers?
• Is information about your customers as important as the information about your competitors? Do you put in the same effort to acquire and analyze it?
• Can you say that your customers are so loyal that they constitute the major competitive advantage for your company?
If you have a negative answer for more than 2 questions it is good to think whether you have a need to improve the effectiveness of programs/strategies you use to keep your customers.
Some issues require complex analysis, so you can answer with yes or no. For this purpose, you may:
1. Determine the main groups of customers.
2. Analyze the current policy of the company towards customers. Does it help you build and sustain the desired customer loyalty?
3. Explore loyalty programs of your major competitors and analyze them.
4. Make a survey about the satisfaction of your customers.
5. Analyze the information received.
An effective program to increase customer loyalty includes:
• Clear purpose and rules of the program
• A memorable slogan
• Real benefit to the client
• Easy implementation scheme
• Leads to increased sales to existing customers
• Is beneficial for both parties
• Establishes mutual trust between the customer and the merchant
• Customers are awarded for their contributions to the company’s profits
• Helps the company to get honest feedback from its customers
• Supports the building of strong relationships
• Reduces loss of customers through the inspiration of loyalty
• Turns a loyal customer in ambassador of the company because of their satisfaction
Building an effective and attractive customer loyalty program will distinguish you from your competitors in the eyes of customers. The presence of loyal customers is a major competitive advantage of the company. To sell to existing customers is cheaper than to attract new ones.
Actions that will reduce the effect of the loyalty program:
• If the operator is designed to give the client a certain gift or bonus for purchasing goods over a certain amount and the gift is not valuable enough. The client will be disappointed and the efforts they have put in to collect the necessary points are pointless.
• If a client can never meet the requirements for a certain discount.
• No levels in the loyalty program, i.e. the customer is not rewarded according to their contribution to the company’s profits.
By creating an appropriate program for customer loyalty, the company customizes contact with each of the clients. This helps to know them better, receive feedback on their needs and preferences.
Loyalty programs are aimed at building long term relationships between clients and companies, as opposed to promotions and advertising, which have relatively temporary effect unless repeated many times. To be truly valuable loyalty program should be consistent with customer needs and what will be valuable to them.
How can customer loyalty increase sales in your business?
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