As any business owner will tell you, the most important factor to consider in business is your customers. Although many companies spend a huge amount of money every year on marketing for new customers, the majority of a business's income will be generated by repeat custom. Previous research has shown that it can cost as much as ten times more to gain new customers that it does to retain old customers.
So how do you go about improving customer loyalty? Well, a great place to start is by rewarding them for their loyalty in the form of a loyalty program. The most common way for a business to entice customers into a loyalty program is to offer loyalty cards. A loyalty card is a card that can either carry a set discount for future purchases, or it could carry information on the customers previous purchases and an accumulation of loyalty points according to those purchases; the points could then be used to discount any future purchases.
It is expected that you are now thinking that there could be great rewards, but also even bigger risks; and that is true, not all loyalty programs work and not all are implemented correctly, but get it right, and you could be seeing a huge increase in profits from just a small percentage of customer retention. Be prepared to wait to see the benefits, though, as it is likely that the increase in profits that you are hoping to see will not be prevalent for 18 to 24 months after the introduction date.
Another benefit to customer loyalty programs is that you can gain valuable market research through monitoring the purchasing habits of customers. Most companies will ask customers to fill in a short application form in order to be accepted into the loyalty program, this form will ask for information on names, ages, addresses, employment situations, marital status, average yearly earnings, product preference and buying habits. That information can be extremely useful if used wisely as you will be able to use the information to adapt your marketing techniques towards the demographics to which you already sell to, obviously meaning more effective and cost efficient marketing.
To reiterate, your business must be ready for the long term commitment that a loyalty program commands. A loyalty plan may cost your company up to 5% of its yearly takings, and it could take as long as two years to see the effects, but when the effects come, you will be wishing you had introduced it sooner. As long as you ensure that the customer has something to gain from entering into a loyalty plan, you will see the benefits; the better the rewards, the quicker the take up and, hopefully, although not guaranteed, the faster the return on your investment.
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Article: What You Need To Know About Establishing A Customer Loyalty Program Author: Mark Walters Publication Date: 2010-12-11 Total Views: 209 Word Count: 485 Category:Home /
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