Customer Loyalty Needs to Benefit the Customer

Recently I was asked how do customers benefit from being loyal to a company. Let’s explore some here.

Typically you would offer your best clients access to improved levels of service. One of my favorite examples is how companies will utilize their telephony software to move their best customers up in a phone queue, so the most loyal (and highest value) customers get preference to be served on the phone first. For those considering this option, you have to analyze the benefit of keeping these customers loyal versus filling the new customer pipeline.

Of course, there was a time airlines provided first class upgrades for free to their best customers; just one of the many loyalty benefits that have seemed to erode in that industry. Is it because someone did the analysis and found it not to be beneficial (if you have insight please leave a comment)? A good reminder for us to always review our loyalty programs and do the analysis.

Insurance companies (like Progressive, Nationwide, Allstate and Liberty Mutual) offer disappearing deductibles to clients who stay with them longer, saving the clients (and likely the insurance companies in the form of reduced marketing expense) money. Disappearing deductibles used to be a fairly exclusive benefit a number of years ago, but seem to have become table stakes in the business. I suppose it is still a benefit to a loyal customer. As a business owner you need to understand if your customer truly perceive it as a benefit before you position it as such.

Costco and REI, among others, offer dividends to their loyalty card shoppers. So in the case of Costco, not only do customers receive credits when they use the card, but they may accrue deeper credits/dividends when they use the card at Costco outlets or with Costco partners. Real great example of the benefit of loyalty.

Many lodging companies offer a deeper discount to repeat guests than to new guests. They will likely provide free upgrades to better rooms if there is availability. No need leaving a premium room vacant. And there is a certain amount of benefit to surprise and delight when it comes to value perception and customer satisfaction.

I love surprise and delight as a concept. I recently stayed with my vegetarian wife at a great hotel known for their chocolate chip cookies and mentioned to the concierge that she would appreciate vegan chocolate chippers (which they did not have on their menu). And oh, by the way, it was to be a little extra gift from me for her birthday. I was expecting to be charged. So I was a little surprised that they did not charge me for the generous plate they brought to my room. But what was even more surprising was the free 30 minute free copper tub soak the concierge provided as her own birthday gift for us. Will I be staying there again next time I go skiing in Beaver Creek? Absolutely. Did I tell all of my friends and coworkers? You bet!

Surprise and delight works on a deeper psychological level. Most people enjoy a surprise. And those who have been surprised (whether positively or negatively) are going to tell someone. And we often remember the surprises in life. So it makes sense to create surprise and delight moments for your customers, and ensure your best customers are relaying a greater share of positive stories. And likely recommending your business in the process.

I can go on and on. In each case the consumer benefits from the loyalty initiative first, with the benefits accruing to the bottom line of the company employing the tactic. But in all cases a business should test these loyalty initiatives to determine incremental impact on retention before investing in them for the long-term. The firm also needs to weigh the investment against other investments that may be available to the business at the time. And they must balance benefits against investment and impact to customers. You want to be careful when favoring one group because that could impact how you service another group or how the other group or segment perceives your company.

Before embarking on loyalty initiatives, be sure to think about the customer. What will your best customers really value? Are there some benefits that may be more important to some customer segments than others? Talk to a few customers from different customer segments (focus groups may work best, or even approaching them in store) to get their perspective. Be sure you consider how a loyalty program aligns with your brand? Are there components of a loyalty program that may be a better fit with your brand than another? What are your objectives and how will a loyalty program help you to meet (or exceed them)?

What are some of your thoughts? What loyalty benefits have you seen for your customers that have been real winners in terms of driving even more loyalty?

And as always thanks for reading and commenting.
Steve

Referrals Jumpstart Your New Customer Acquisition: 5 Keys To Success

When I think about all of the programs a brand can implement to acquire new customers cost effectively and relatively quickly, I can think of none more effective than a customer referral program. Are you a business that creates raving fans? Do you have a group of customers that spend a significant amount of money buying your product or service, and doing it repeatedly? Do you have customers that regularly rate your brand, product, service, etc. a 9 or 10 on a scale of one to ten when you survey them? If not, then you have bigger projects to implement. But if you do, then you must consider a referral program.

One insurance company I worked with saw their agents who had a referral program in place double their  growth rates. Those agents not having a referral program experienced flat to negative growth.

Key #1: Be sure you have a positive value equation.

The first key is to provide a valued product or service to your target market, and make sure the experience they have is the best possible experience they can have for the money. The value equation must be positive in the customer’s favor. You are more likely to give out a referral to someone who has provided you with stellar service, so don’t expect anything different from your customers.

Key #2: Be sure you ask the right people.

Next, are you measuring customer willingness to refer on either a post-sale or post-service satisfaction survey? If you are, then you can leverage those giving a top score on the question “Are you willing to refer a friend to company X (or product X or service X)?”. Start with all those giving you a 10, and gradually test your way into those giving you a 9 or even an 8. Use success in getting business from a referral as your KPI. You should never ask for a referral from someone at a lower threshold. I would personally not go below asking an 8, unless I was personally able to turn someone around from a lower score by resolving an issue.

Key #3: You have to ask for a referral.

The above covers who to ask, but how do you ask? If you have data from the above feeding into your CRM system (and you should), then kick off an automated campaign (email works) that thanks the customer for their business. Tell them that you want to provide the same great product or service that they enjoyed to a friend or two. Then say “Will you please refer us?” It helps if you can link to a site where they can provide you with this information. If you provide a link and collect referral info, then you can reach out to these friends, but be sure to reference the referrer. Of course, work with your ESP and Legal/Compliance team to be sure to have the correct and legal process in place. Your email campaign can also provide links to social networks like Facebook or LinkedIn  or popular review sites like Yelp! or TripAdvisor where customers can post testimonials, in the event they are shy about providing specific names/info of friends.

Or you can ask over the phone or face-to-face if you regularly have contact with these individuals. A handwritten thank you note that specifically asks for referrals is another nice way to ask.

Remember, your likelihood to get referrals increases with your willingness to ask. If you don’t ask, you don’t get ’em.

Key#4: Incentives

You can provide small gifts to individuals who provided you with referrals. The store at which I have purchased my eye glasses recently offered a $25 credit for every referral I gave them that resulted in a purchase, in addition to giving my referral a similar credit on their first purchase. But, again, you must talk to your attorney on this too, as some verticals like Insurance and Financial Services have strict regulations on compensating for a referral.

Key #5: Be transparent

Finally, if you ask for referrals, be sure your customer knows what you are going to do with that referral. Transparency is a huge concern for most consumers these days. So if they know how you are going to use the referral they provided to you, they likely will be more trusting and willing to provide you with a referral.

Please tell me what works for you from a referral perspective. Or, if you want me to work with you to craft a successful referral program for your business, contact me at smintz@tds.net.

CLM Defined

The first question most people ask me is what is CLM? CLM stands for Customer Lifecycle Management. A CLM approach transcends traditional marketing, which tends to focus on the execution of cyclical campaigns and lead acquisition. With CLM, the focus is on the individual in true 1:1 fashion across the entire life of the consumer with the business or brand.

CLM takes advantage of data in our CRM system and enables us to communicate in real-time (or near real-time) to our customers, qualified leads (prospects), and non-qualified leads (suspects). Every customer communication strives to advance people through the lifecycle, deepening their engagement with and loyalty to your firm. With deepening engagement and loyalty, you not only grow your existing customer relationships and retain better, but you convert prospects better. And that means more revenue. CLM requires a planned approach to managing your customer through all phases of their relationship with you.

Typically a CLM approach can cover these phases of the Customer Lifecycle.

  • Awareness
  • Acquisition
  • Engagement
  • Retention
  • Growth
  • Recapture
  • Reengagement

CLM should also ensure that you are targeting the right customers with the right message at the right time. Do we need to send everyone the “Spring into Savings” promo? No there are folks that are likely to buy anyway and there are some that are not Spring-time buyers, or there may be folks that are retention risks for whom we need to focus a more retention-based message or surprise and delight instead of our scheduled promotion. If we are doing it right, we are being more efficient, which makes an investment in the approach a moneymaker over the long-term, providing real return on our budget dollars.

Eventually on this blog I will go into each one of the above phases with ideas and examples for how you can successfully take a CLM approach. I also plan to cover typical CLM-based objectives and strategies you can employ. I also plan to write about the customer-centric approach that a successful CLM program offers. I will also cover topics relevant to CRM since a good CLM approach requires the attention to process and technology that a good CRM program  requires- and goodness knows there are too many people struggling with CRM in the real world. Finally, thanks to 20 years of developing and executing on direct (direct mail, telemarketing, transpromotional messaging, DRTV, etc.) and digital (SEO/PPC, display, email, SMS, social media, mobile, etc.) marketing strategy across a number of verticals (financial services, insurance, credit unions, durables, apparel, CPG, and hospitality/entertainment), I will cover topics in these areas too.

So thanks for coming on this journey with me. And let me know if there are any topics that are of particular interest to you. After all I am privileged to have you visit my blog. The least I can do is make it relevant for you.

Thanks!

Steve