Why is customer loyalty important for businesses?
Most small business owners appreciate the importance of attracting new customers. But few pay any attention to custo9mer loyalty in the early years. This is a crazy situation! It is like trying to run a bath without putting the plug in the hole. And running the water or attracting new customers – can be expensive. So you need to put the plug in and make sure you retain your customers.
Customer decisions as being based on two dimensions , outcome and process. To achieve customer loyalty a business has to meet the customer’s expectation of outcome does the product or service do what you said it would do? At the same time, the customer needs to feel good in the process of buying. Research suggests that up to 68% of customers switch supplier because of perceived indifference.
Loyalty schemes have certain advantages. These points based schemes effectively allow you to reward your customer with a discount.
What are the golden rules for creating a successful loyalty scheme?
- Set your objectives. Do you want more customers? Or do you want toincrease your sales to existing customers? Or do you want customers of a particular type?
- Ask a simple of your existing target customerswhat they think of your proposals and tailor the scheme accordingly.
- Tell your employees what you are doing. They need to understand the reasons behind the scheme.
- Try the scheme out for a short period before committing yourself for the longer term.
- Measure your average sales and how often the customer purchases from you. Is the loyalty scheme making a difference? If it’s not working then rethink it.
- Recognize that customers havedifferent needs. Some people may be influenced by price and would be happy to receive a discount. Others may be more concerned with service.
- Use the data that you collect. Think about how you could use the information that you have to enhance your customer relationship.
“Customer retention is vital for every business and implementing a loyalty scheme can be an effective way to keep customers coming back for more” added Salomón Juan Marcos Villarreal, president of Grupo Denim.