Written by Vivek Jaiswal | Co-founder, Customer Guru
What is the first thing that comes to your mind when you think of customer loyalty? Is it a customer that sticks by your company through thick and thin or is it those loyalty cards that many companies use as an excuse for building customer loyalty? If it is the latter, you’ve got your whole perspective wrong!
Customer loyalty is not something that is given, it is something that your company should earn.
Now you may confuse customer loyalty for customer satisfaction, however, they are both very different. It is believed that customer satisfaction inevitably leads to customer loyalty but this notion might not always be true.
Maybe this quote by Shep Hyken explains it best:
Customer Satisfaction is a rating, loyalty is a brand.
Now I’m not saying customer loyalty programmes are bad for your company, however many of them are not used in the right way. Most brands have a loyalty club through which they claim to gain customer loyalty. Unfortunately, although loyalty club membership is on the rise, customers don’t feel that they are more loyal to a brand because they are a member of its loyalty club. In a market research conducted by Ipsos Mori, it was identified that over 60% of the respondents belonged to at least one loyalty programme but only 26% agree that it made them more loyal to the brands.
So, what’s going wrong with these loyalty programmes? Aren’t these loyalty programmes/cards/clubs meant to enhance customer loyalty? At least that’s what their name suggests!
Segment your customers into the above four blocks. Based on how much it costs you to retain such customers and the value of the customer you could place them into the four categories: ‘Questionable Asset,’ ‘Strategic Partner,’ ‘High Maintenance’ and ‘Ball & Chain’. Focus most on your Strategic Partners as they are the ones who are most profitable to your company, and don’t cost too much to retain. Invest in such loyal customers and in return they will advocate for you. The customers falling in ‘Questionable Assets’ quadrant should be your next priority. Work on converting them to Strategic Partners by identifying the reason for their dissatisfaction and high cost-to-serve, and then giving them unmatched customer experience by resolving those concerns.
Now although you may have a loyalty programme in place, take a look at it from your customers’ perspective – through a customer experience lens. Do they believe themselves to be a loyal customer to your company? Perhaps a loyalty program doesn’t define the extent of their loyalty. They may just be using that programme to save themselves that last dollar. Avoid forcing a loyalty programme membership into your customer’s life, rather earn their loyalty through the provision of an outstanding customer experience. After you’ve earned a promoter for your company keep them loyal to your brand by offering them various non-transnational benefits and perks that make them fall in love with you, whether you give a discount or not!
For the sake of customer experience, please ensure that your customer loyalty club offers your customers more than just those loyalty points which, in the end, only gives them $5 in real value.
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