“Loyal Customers, they don’t just come back, they simply recommend you, and they insist that their friends do business with you,” says Chip Bell, the Customer Service guru.
A Harvard Business Review study found that loyal customers purchase more, are willing to pay higher prices, they are easier to service, and they help expand the customer base by giving positive referrals. They established that a mere 5% increase in customer retention increases an organization’s profitability by 25 percent. Acquiring a new customer can cost as much as five times that of retaining an existing one.
Having said that, customer retention isn’t easy either. More than 65 percent of retailers use customer loyalty programs to boost customer retention. With a variety of loyalty programs from rebate/cash back to discount, how do you know which program is right for your business?
The key to any loyalty program is to engage and focus on simplicity. Gone are the days where customer loyalty programs were seen as mere earning and burning points. The shift is towards the emotional quotient, creating a unique advantage and meaningful experience for the individual shopper. The brands that can build the emotional connections generate true advocacy.
In an age of growing complexity, the ultimate challenge for any retailer lies in creating the experiences that are uniquely contextual and personal across all channels. Thanks to the advent of technology and online engagement platforms, today’s consumer has more control over his/her personal shopping habits. They have access to information and valuable promotions at their fingertips thus challenging the retailer to focus more on the emotional value of an individual shopper.
Establishing this emotional connection is the key. Listen to your consumer carefully and keep track of his/her likes and dislikes, every time. Then, design a loyalty program that makes your consumer feel that they are valued as individuals and most of their preferences are addressed. In addition to increasing profit margins a personalized retailing experience can strengthen customer loyalty. In our recent survey, almost 83% of consumers expressed that they would likely be a repeat customer if a retailer provides them with simple personalized offers.
Today, a consumer is well aware that the big data analytics are used for personalized loyalty programs. They are not against that, but want the ability to respect and protect their privacy, based on individual preferences. Devise a loyalty program that connects with your consumer’s emotion and makes him/her feel more valuable.
About Author :
Meera Ramakrishnan is the Manager, Corporate Communications at Intellect Design Arena Ltd. A startup enthusiast, Meera has over 10+ years of experience in content marketing.
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