Selling ought to maintain turnover volumes or increase them. This activity is often transposed one-sidedly into winning new customers. Indeed it is not unusual for newly promoted selling professionals attending their first formal sales training course to want to focus on this aspect alone. However, in the effort to move into new target clients and to cover more completely target groups already worked, care of your core customers is an important subject.
Many well known businesses use loyalty programmes as a way of caring for and developing their existing customers. To be effective all loyalty programmes need to achieve two goals. These are promoting customer loyalty through reward, and building the customer relationship as something long term.
Worthy of particular attention is the second of these goals. The "Bargain of the Month" or the regular "Trial Price" do not make a loyalty programme. The reward must be designed so that it promotes long term loyalty, otherwise you will only achieve the effect of a short term promotion and the full potential of the loyalty programme remains unused. In other words, instead of attracting bargain hunters, good existing customers should be encouraged to purchase again and again from you.
Loyalty programmes from the business point of view: From the business point of view a loyalty programme starts with the realisation that not all clients are the same and that it is sensible to aim, in preference, the loyalty scheme at your most attractive clients. The loyalty reward and the desired behaviour of the client must be closely bound to one another. In this the value of the reward should not go beyond the additional value creation aimed for. The checklist below lists the considerations which are helpful in thinking about a new loyalty programme:
What types of customer do we have? (e.g. often buys small amounts, sometimes buys large amounts, only buys special offers, often buys one-off pieces / ends of lines etc.)
How much is each type of customer worth? (if applicable, taking into account the length of the customer relationship)
What types of customer have potential for development? How great is this potential?
What customer behaviour (or what type of customer) do we want to encourage, what type do we want to avoid? What do we get out of the change?
How much additionally created value are we aiming for if we gain x% of added potential with a programme?
What is the maximum amount that the loyalty programme can cost? (y% of the additional value created)?
Loyalty programmes from the client's point of view:
As taught on sales training courses, whether customers take part in the loyalty programme in the way you want them to or not depends on five factors:
1. The cash value of the reward. In some schemes it is easy for the customer to calculate the cash value of the reward, such as a customer card which gives a discount of, for example, 5% off all purchases. With other schemes the cash value is less easy for the customer to calculate, for example an airline company's air miles scheme where the multitude of tariffs, means the customer can only estimate the cash value.
2. Attractiveness. Customers pay attention to how worthwhile the reward is for them personally. Thus it is quite possible that, when buying furniture, a reward in the form of a side table (cash value c.5% of the purchase price) will be valued less than a free flight on a frequent flier programme (cash value c.3% of the tickets paid for).
3. Palette of redemption possibilities. If there is a choice of several rewards of equal value, the attractiveness of a programme increases because from the point of view of the client it is more likely that one option will meet with their personal tastes.
4. Relevance. Behind the issue of relevance is the question, "Is the reward attainable?" The bargain hunter who constantly changes supplier for the sake of investigating something else, may come away having spent less in total than the client who stays. As such they do not reach the premier level with any supplier. If they become aware of this they may change their approach and concentrate on one supplier - the one with the most attractive rewards.
5. Comfort. Neither the client nor the suppliers' involved want to carry out onerous paper chases in order to operate the premium process. This is what makes premiums connected with credit cards and client cards so attractive - since all the turnover data are available immediately centrally through the operation of the transaction by computer.
Businesses whose size or capabilities are not sufficient for all the aspects, can increase the attractiveness of their programme by way of partnerships. In the conception of collaborative programmes it is necessary to carefully test whether the loyalty being aimed for will also benefit your own business. Mistakes in conception are expensive - the costs are real, the "loyalty" emerges as the consequential problem.
In summary, a loyalty programme is successful if it can compete in all five areas. Good sales training courses will show you how you can best present the benefits of your loyalty scheme to your customers to maximize sales success.
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