Most businesses understand the tremendous value associated with exceptionally loyal clients.  That’s why businesses of every size and form have implemented loyalty programs to keep their best clients.  Unfortunately, this traditional loyalty version provides differentiation in the industry and has grown tired.  It’s time to rethink customer loyalty.

Flooding The Market 

Unfortunately for most businesses, any benefit that was initially obtained through faithful programs has quickly eroded.  While airline, hotel, and car rental agencies were the pioneers of mainstream loyalty programs, other businesses were quick to leap the loyalty program bandwagon.  The outcome is a business environment where the pet store and every restaurant, gas station has some type of devotion card or program.

Consequently, having a loyalty program is no longer a competitive differentiator.  It has become a mainstay of a business environment where loyalty programs have become a product and a detractor to the overall customer experience.  They get in the means of business efficiency – often necessitating another step.  They have become nothing more than another way to offer a price promotion.  Loyalty programs can also produce disdain for clients that can’t receive the benefits of pricing offered to program associates.

Rethinking The Loyalty Program

If businesses want to reap the benefits of accurate customer loyalty – it is time to reevaluate what client loyalty actually means.  Customer loyalty, according to Cornerstone Credit Services, is not obtained accumulating points by simply holding a card, or redeeming rewards.  What’s more, loyalty can’t be quantified frequency by client wellbeing or by volume.  Customer loyalty isn’t a one-way road; it can’t be determined only based on what the client has done for the corporation.

Instead, customer loyalty ought to be turned upside down.  Perhaps more companies would get it right if they measured loyalty in terms of the degree.  Address them as people, companies should aim to recall repeat customers, call them by their title, and treat them unique.

Think about the simple lesson of consumer loyalty that was exhibited per week on the 1980’s sitcom “Cheers”, the pub where everyone knows your title: In the start of each series, the bar’s best client,’Norm’, would enter the bar and proceed to ‘his’ barstool.  There was no loyalty program and no card scan ‘platinum’ level required to obtain entrance.  His name was really known by everyone he had his chair at the bar, and the pub owner knew precisely what he wanted to drink.  ‘Norm’ was loyal, but the institution was faithful to him too.

Individual client loyalty is a simple concept that’s often overlooked in the modern business environment comprised of multiple touchpoints, stations, and markets.  When businesses get large and complex, the client becomes nothing more than a human body, the usual few, or an inconvenient commodity.  When that occurs, it becomes increasingly hard to treat genuinely loyal clients otherwise.

Together with the overabundance of loyalty programs today that provide nothing more than cost discounts, it’s no wonder that customers are getting to be decreasingly faithful to any one brand.

With so much at stake, it’s time to rethink customer devotion.

Steps For An Effective Customer Loyalty Program

Wider organizations have become dissatisfied with their client satisfaction surveys and turning instead to designing and implementing customer loyalty applications.  The reason is simple, following 10 years of conducting customer satisfaction polls the American Customer Satisfaction Index has, basically, not moved at all.  This is despite business supposedly investing USD800,000,000 every year.  

Step 1: Connect customer loyalty to business results 

Before you make any investment you need to understand what the prospective returns are going to be.  The heart of Measure 1 is linking your business goals (revenue, profit, market share, growth, whatever) to fluctuations in client loyalty.

That way you exhibit the benefits as well as the expenses of your customer loyalty plans when you present them to your management.

Start by taking your key business dimensions and connect them to fluctuations in customer loyalty.  If consumer loyalty were to grow by 10% increase would be profited by how much?  It is possible to download our free tool to create this task simple or produce your own.

Step 2: Locate a loyalty index 

While customer satisfaction surveys are measuring pride at finer and finer levels it is becoming obvious that, as a metric, client satisfaction is not a very reliable measure of loyalty.  Customer satisfaction surveys were designed to be customer loyalty marketing surveys but they’re actually no such thing.

Research is now showing that, based on your business, unless your customer scores you in the”top box” on your client satisfaction surveys, i.e. 5 out of 5 they have small actual loyalty to your organization.  Let us face customer satisfaction is table stakes –you’ve got to do to keep them faithful.

However, recent research (1) has proven that there is 1 question, the response to which is a good indicator of customer loyalty.  This issue is “How likely would you be to recommend us to a friend or colleague”.  

Step 3: Describe the drivers of customer loyalty

Every business has a selection of attributes that may influence consumer loyalty.  If you’re in fiscal service it might be areas like service fees, the line spans in branches, merchandise features, etc..  If your business is physical merchandise they are delivery times, stock holdings, and purchase quantities.

Starting with the one question above, add questions about these different potential drivers of customer loyalty to your customer loyalty marketing surveys.  Do not add a lot.  Perhaps 15 or 10 and be certain that you use a rating scale to accumulate the customer perception of your performance.

Now comes the most important part: find someone to do some reasonably statistical evaluation of your results to ascertain which of the drivers are most important in terms of consumer loyalty.  There are a couple of techniques that are different but regression and correlation analysis would be the most common.

Step 4: Implement your client loyalty programs

You have the vital information which you need: you understand the condition of customer loyalty and you understand which of your business attributes are most important to this loyalty.

Start by focusing on just some of the most significant drivers which you also believe that you can alter and get started making changes in your business.

Perhaps you’ve found that line lengths in your branches are an integral driver of customer loyalty.  Work with your staff to identify ways to change your business processes and reduce line lengths.  Be sure that you align staff compensation strategies and bonuses so the changes you make will be permanent.

As soon as you’ve improved the most important areas move on to those that are less important.

Step 5: Re-survey your clients 

Recall the goal is to improve customer loyalty.  Marketing surveys repeated at regular periods will let you know how you’re customer loyalty programs do on both customer loyalty and customer loyalty’s important drivers which you have identified.