In a competitive marketplace where customers find it easy to switch supplier, loyalty schemes are an effective way to increase customer retention and improve your profitability. If you want to build a loyal clientele, keeping the customer satisfied isn’t always enough. The fact that your customers are satisfied doesn’t stop them from taking their business to a competitor. To increase loyalty, you need to recognize and reward your best customers. A customer loyalty program can be used to incentivize and delight your most valued customers. That in turn can do wonders for your profitability.
The rewards you offer to regular customers can vary from fixed discounts to extra goods or prizes. A hairdresser, for example, could offer a simple card scheme whereby customers get a free treatment for every ten visits. A mail order firm may offer a discount for bulk orders. Above all, the scheme should be simple to use and the rewards should be attractive and attainable. At the same time, make sure you can recover the cost reasonably quickly.
The data generated by a loyalty scheme can also be used to improve your bottom line. Loyalty programs put the spotlight on customer behavior. Customer loyalty software can identify you your best clients – and highlight your worst. It can be more profitable to lose bad customers than to gain new ones. While your best customers may be bringing in the lion’s share of your profit, your worst customers – bargain-hunters that spend little and only buy discounted goods – can actually cost you money. Your loyalty scheme can significantly improve this scenario by customer segmentation and rewarding customers, while actively dissuading the worst. Loyalty schemes can also be used to win back lapsed customers.
The data generated by a loyalty scheme can offer other valuable insights. Customer analytics can highlight defection patterns and can also help you improve your product range and stock selection. Knowing what your best customers frequently buy helps you choose which lines to stock – and which lines to expand.