Find the best digital marketing software and service providers to help grow your business.
Welcome Guest | Sign In

Loyal Customers Are Not to Be Trifled With

By Christopher J. Bucholtz CRM Buyer ECT News Network
Dec 13, 2012 5:00 AM PT

As I've said in the past, CRM's biggest benefit is in extending your customers' relationship with you for as long as you can. New customers are great, but returning customers are profitable -- and profit is what you're really after, right?

Loyal Customers Are Not to Be Trifled With

Thus, it makes sense to foster loyalty in these customers. The first phase of this comes in the form of your employees and the relationship they build with customers.

Whether it's a B2B or B2C selling environment, customers would prefer to work with people who know them and whom they like. Thus, it's important that those employees care about the niceties of forming relationships on a face-to-face or phone-to-phone basis.

Backing them up is the CRM system, which serves to institutionalize the knowledge gleaned by your employees in face-to-face interactions and in other, more easily automated and recorded interactions.

With that one-two punch, you're well equipped to launch a loyalty program, which makes it a bit astounding when you see many of these efforts in action.

What's in a Name?

For example, one business I buy from weekly solicits me with offers via emails addressed to "Curis." I know what's happened -- whoever was put in charge of data entry for this particular marketing effort simply missed the letter "H" and hit "U" instead. But the people at the store know me by sight and by name; trying to enhance my loyalty by addressing me by a typographical error is actually a step backward.

So is a lack of responsiveness to my repeated attempts to correct the spelling. In the grand scheme, "Curis" is not a deal-breaking typo, but it suggests a lack of care about me as a customer. This is not what you should engender through a loyalty program.

Another example: At a business I frequent, a cadre of regular customers has long been given a 10 percent discount at the counter. The staff knows that we're essentially live-action "super users," the kinds of customers whom the staff can ask to help other customers. As we're shopping, we're actually augmenting their staff -- and the staff knows and appreciates that.

Giving the 10-percent discount was a nice touch. Then the business decided to offer a "loyalty card" that allowed you to build up "points" toward a discount with your purchases. Hey, wait a minute -- you're saying that all my previous purchases, plus my assistance to fellow customers, has now been wiped away and I have to earn my way back to a status I already held? And the discount, once I earn it, will be less than 10 percent?

How is this supposed to make me loyal? Isn't it more likely to make me disloyal, because it's clear evidence of how the business is disregarding my past loyalty by starting me back at zero?

Efforts like this loyalty card work well if your business has just started. In most cases, however, these programs debut after a business has some history, some customers, and some history with certain customers.

3 Big Don'ts

If you're trying to boost loyalty, here are three suggestions:

1. Don't go back on offers you've made to loyal customers.

If you offer something as a show of gratitude toward loyal customers, and you're clear about it being an ongoing offer, revoking it summarily suggests the opposite: You no longer have that gratitude.

It may be easier for the business to do away with earlier offers in the course of implementing a new loyalty effort. However, it's not easier for the customers who benefited from that earlier program. It's frustrating and confusing, two things that will provide emotional impetus for them to buy from someone else.

2. Don't create conditions for new loyal customers that are less attractive than what you've offered past loyal customers.

It makes sense to treat different buyers in different ways; regular customers who spend a lot should get better treatment than regular customers who spend a little, for instance. Don't set up a situation where similar customers receive different rewards, though. This can happen when customers are identified as worthy of retention at different times.

The problem here is that customers talk to each other -- and explaining that one customer gets a better discount than another solely because of the date at which the entered a loyalty program suggests you're treating these valuable customers in an arbitrary fashion -- mostly because that's exactly what you're doing.

3. Don't get complicated.

Don't create a loyalty program that turns the customers' participation into a job. In other words, don't turn the program into something confusing or complicated, because your customers don't want to have to work to be recognized for their loyalty.

They also deserve to have the same expectations that you have. A complicated program with points structures, expiration dates and qualifying conditions is likely to create confusion that leads to conflict. Why would you want to engender conflict with your loyal customers? That runs exactly counter to the entire point of rewarding loyalty.

CRM Buyer columnist Chris Bucholtz blogs about CRM at the CRM Outsiders. He has been a technology journalist for 17 years and has immersed himself in the world of CRM since 2006. When he's not wearing his business and technology geek hat, he's wearing his airplane geek hat; he's written three books on World War II aviation.

Facebook Twitter LinkedIn Google+ RSS
Which of these tech companies has the greatest *positive* impact on society?