Tag Archives: Retaining customers

Customer Loyalty programme – good or bad?

What is a customer loyalty programme?

Customer loyalty is where your existing customers return to you time and time again with repeat business. It’s usually because they love your brand, love your products/services and are really happy with the experiences they’ve had with your business.

Over the last several years, we’ve seen more and more companies using customer loyalty schemes or programmes to reward their existing customers, and to encourage them to keep coming back for more. A good example is that of coffee shops. They give you a card and every time you buy a coffee you get your card stamped. When you have 10 stamps on your card, you get a free coffee. Some programmes give you cash-back or use a points system, but they are all basically the same, with the same reasons for using one.

Why use a customer loyalty programme?

They are great for small businesses because they give your customers an incentive to give you repeat custom. Some loyalty programmes reward customers for introducing a friend (and they get a reward if that friend becomes a customer).

These programmes also increase your brand awareness and can help generate a positive return on investment. But, as with any scheme or programme, there are the downsides as well as the upsides. I thought I’d take a look at the pros and cons, so you can be in a better place to decide whether a customer loyalty programme might be good for your business.

The Pros

Customer Retention

According to the advisory firm, Bain & Co, increasing customer retention by just 5% can boost your profits by 25%-95%, so looking after your existing customers is vital for the good health of your business and profits.

Customer loyalty programmes also have the benefit of making your customers feel like their custom is valued and they feel appreciated. This, in turn, makes them want to carry on doing business with you. And it makes financial sense to introduce such a programme as, according to Inc.com, existing customers spend 67% more than new customers. So, the benefits to both the customer and your business is potentially huge to boost customer retention and give them an incentive to buy more.  

Direct communication with your customers

Your customer loyalty programme means that you have access to a direct line of communication with your customers. This makes things a lot easier to build your brand awareness and increase that loyalty by providing them with regular and relevant information. You can collect their email address as part of your loyalty programme and can share news about new products or services, events, any promotions you might be running, as well as any updates to the loyalty programme.

Customers who feel valued and ‘in the know’ about a business they buy from, will not only keep returning to you, but they will tell their friends and family, which could give you new connections and customers.

Data on customer trends

Having the contact details, such as email, of your customers, and the records you keep of sales from each of those customers gives you valuable data. Customer data gives you an overview of your customers’ buying behaviour. You know what their preferences are, you know their buying habits, such as when they are more likely to buy something. This not only helps you with knowing what works and what doesn’t, if you sell products it can help with your stock and knowing what to stock more of. It also helps you with your advertising and promotions planning and helps your marketing, as you can measure the results of special promotions, new products etc.  

It can also help you to segment your customers and find out which ones are profitable and which ones aren’t. This can help you decide which customers to target with new products or new promotions, as you can target the ones that are more likely to buy from you.

Brand differentiation

Loyalty programmes help your brand and can help distinguish you from your competitors. As a customer myself, I know that I am bombarded on a daily basis with an overwhelming number of choices for a particular product or service. The minute you type anything into a Google search, it seems to be picked up by your social media pages and you get loads of adverts about the product you’re looking for – you also suddenly get a barrage of spam emails about the same. I don’t know about you, but I find this extremely irritating! I’d rather stick with a brand that I know and trust.

A loyalty programme can help your customers choose you over the competition and the fact that you offer an incentive to be a loyal customer, this differentiates your brand against the other businesses with a similar brand to yours.

It can also help you in slow seasons, when business is not going very well. Take an airline for example, in the summer they sell loads of plane tickets as people jet off for some summer sun. But in Autumn and Winter, business can be a bit slower. So, they do special low prices on airline tickets to incentivise customers to get away in the slower seasons, at a much reduced price. This keeps the airline ticking over.  

The Cons   

All loyalty programmes look the same

Loyalty programmes are not a new concept and many businesses have the same kind of incentive scheme running. They have similar purchase requirements and benefits for the customers. With the abundance of loyalty programmes around, customers could feel overwhelmed by the choice, and this can make it harder for businesses to generate excitement for their programme. So you need to create something unique and that stands out from the others…this is not easy.

Loyalty costs money

Creating a customer loyalty programme does cost money. Any discount you give is going to affect your profits. Even a small discount can seriously impact your profits. For example, say you give a 5% loyalty discount. A product that costs £50… is £40 in costs and £10 in profit. If your customer buys that product for £50 with their 5% discount, they will pay £45. So, from your business point of view, you still have to pay your £40 costs, so your profit will be £5 – this is a 50% decrease on what you normally earn. You could help this by putting a timeframe on the discount – 5% off for the next month. The losses you suffer could be lessened by the increase in business from that customer.

Your loyalty programme has to be worth the time, money and effort you put into it. If it is proving to produce more repeat business, it could still be worthwhile financially, especially if you’re selling more to a loyalty programme member than normal. It’s just something to be aware of.    

Is the behaviour you witness actual loyalty?  

It’s hard to tell if your customers are loyal to you and your brand, or whether they just buy from you out of habit or because you’re closer than anyone else who does the same. We often look at a frequent customer and think they are loyal, but loyalty is an emotion which can’t really be measured. So how do you get around this?

This is where you can use marketing tactics to find out just who is loyal. You could reward customers for referring family and friends, or for writing a good review. This will show who is actually willing to stand up and vouch for your brand, stating the reasons as to why they like it.  

Another way to keep that loyalty to your brand is to include customers in your advertising – what better way to advertise your product, than to use a photo of a real customer using your product, or talking about the excellent service you give.

Data does have its limitations

As well as being a good thing, data does also have its limitations. For one thing, it doesn’t give the full picture of your customers’ overall purchase behaviour, as it can’t know what they’ve bought from other brands or shops. You also can’t tell from data if a customer is buying from you just because it’s at the right price and others may give repeat business just so they get the benefits of a loyalty programme.

You could survey your customers to find out more about their loyalty, but some will be reluctant to provide information about where and what they buy elsewhere. They might even feel offended by it.

Conclusion

There are clearly huge benefits to having a customer loyalty programme, but it’s important to be aware of the downside too. And not all programmes are successful, as the marketing and implementation is crucial to their success. However, they can help you generate more business and be rewarding for your customers.

Look out for next week’s blog, when I talk about how to promote your customer loyalty programme.

In the meantime, would you consider running a loyalty programme for your small business? Maybe you do already. I’d love to hear your thoughts on all aspects. Please comment in the comment box below.

Thank you for reading!   

How to measure customer satisfaction

We all know that unsatisfied customers cost money. Research has shown that about 80% of customers will go to a different company after just one bad experience, especially if it’s about the service they receive. This is why it’s so important to measure customer satisfaction to find out exactly what your customers think of you, your company, your products or services, and the kind of customer service they receive.

It’s a fairly simple thing to do, but the first hurdle for any business, big or small, is actually admitting that you have a problem, or that there is room for improvement.

Measuring customer satisfaction simply boils down to collecting feedback from your customers, either via a survey or using customer data…preferably both!

Why should you measure customer satisfaction?

I’ve already mentioned one reason – customer dissatisfaction.

If a customer is not happy they will not buy from you again. They will find take their business elsewhere and you will see a rise in complaints.

If you were measuring satisfaction, you would identify any problems early enough to be able to do something about it, and save your customer before they defect to another company.

Customer retention

It’s much easier to retain your existing customers rather than go through all the marketing and hard work to acquire new ones.

If a customer buys from you regularly, they bring much more value to your business. A happy customer is more likely to remain loyal to you and your brand.

Measurement helps you keep your customers happy, so they’re more likely to stick with your business, buy more and recommend you to family and friends.

Negative comments can damage your brand 

A bad customer experience will most likely be shared with family and friends. An unhappy customer is also likely to share their bad experience on social media sites. This can give your business a bad reputation.

Best-selling author and sought after celebrity speaker, Catherine DeVrye, is a world authority on customer service. She also won Australian Woman of the Year. She once said, “It takes years to win a customer and only seconds to lose one.” This one statement resonates with me more than any other I’ve read. I want my customers to be loyal, and loyalty, like trust, has to be earned – you can’t buy it.

I get my computer protection software from a big, well-known company and stay with them because it’s easy to deal with them. Their product is good and does what it says on the tin and they have a good reputation. But it has started to annoy me that this company spend thousands on expensive advertising campaigns, with rousing music, great copy and a fabulous enticing offer for new customers. But, hang on a minute, I’ve been a loyal customer for countless years and the amount I pay goes up substantially every year. Sometimes I think they take it for granted that I’ll just renew my subscription every year and pay whatever they say without any questions. Should I stay loyal to them when I get a new computer? They don’t make me feel valued as a customer. Apart from sending me emails about new and enhanced features that will ultimately cost me more, I don’t hear from them. There is no incentive for me to stay with them…would it really hurt for them to say, “you’ve been a great customer for more than 10 years – we’d like to reward your loyalty with XXXXXX” It doesn’t necessarily matter what I’m offered – it could be 10% off for a year. It could be that they offer me, as a valued customer, the new features to try out for free for the first year and no increase in my annual subscription. Now that would impress me. It doesn’t take much.

With this in mind, I’m so careful never to take my customers for granted or to forget about them. At the end of the day, they are my ‘bread and butter.’  

Enhance that all important customer experience

By measuring what your customers think of your products or services, you are giving them the chance to have their say. This will help you improve your relationship with that customer and could produce ideas on how to improve the customer service you currently offer. Your customers could come up with the solution to a problem you’ve been having, especially if you ask the question, “How can we improve on the service you receive from us?”

If you’re measuring customer satisfaction on a regular basis, you will be able to see the spikes in either direction. The measurement might reveal that customers are very happy with the service they get…in which case you know that you’re heading in the right direction.

Measurement Strategy

Once you are measuring what you do, the results will form the basis of your strategy – how are you going to improve so the scores are better the next time you do it?

So, when doing your marketing plan/strategy, always include a measurement section, which details solid measurable objectives and KPIs, (key performance indicators).  If you’ve ever worked for a big company, you’ll have heard of KPIs as they form part of your annual performance review!

CSAT  

OK, I have talked about measuring customer satisfaction (CSAT), but how do you measure it?

CSAT is a key performance indicator (KPI) that tracks how satisfied your customers are with your products or services…or both.

It is measured by customer feedback surveys that you send out. Usually it is a question at the end of a survey which will say something like…

‘How would you rate your overall satisfaction of the (service or products) you have received?’

Your customers are asked to reply by ticking the box of one of five answers…

  1. Very unsatisfied
  2. Unsatisfied
  3. Neutral
  4. Satisfied
  5. Very satisfied

The results you get from all your customers can give you an average score…best done as percentages. For example if you surveyed 100 customers and 85 said they were satisfied or very satisfied, you would have an 85% total customer satisfaction rate, with 15% customer dissatisfaction. 

The next step would then be to look at the 15 customers’ feedback, who rated you as giving dissatisfaction to try and identify why. This could be answered in other questions you’ve asked. If you can’t identify the reasons, it would be worth contacting those customers to find out what you can do to improve. This gives you a chance to turn the feedback around to positive for next time. The important thing is NOT to ignore it.

You can use a survey to ask very specific questions, such as ‘How do you rate the service you receive by telephone?’ or ‘How likely is it that you will recommend our business to your family and friends?’   

The only downside of CSAT is that it only measures how your customers are feeling here and now, at the time they complete the survey. They might be having a bad day or have been trying to get hold of you and haven’t yet had a reply, which could provoke a negative answer.

Before you jump in and send out a survey, define what you want to achieve.

  • What do you want to measure?
  • How are you going to send it out? By post, email, telephone or via social networks?
  • How often do you want to send a survey – once you send one, you’ll need to send more in the future so you can compare results. Once a year is good as you don’t want to bombard your customers with questions.
  • What questions do you want to ask? It’s good to have a range of questions – some that have multiple choice answers and some that are free text. For example, you might want to ask ‘How can the service we provide be improved?’ This would need a text box so the response can be written by the customer and they can write as little or as much as they want to.
  • Questions need to be clear, concise and straight forward and be easy to understand.

Conduct an interview on the telephone

This is a more costly way to get feedback, but it definitely has its benefits. For example, if you are launching a new product and have several long-standing and loyal customers, it would be a good idea to get their opinion. This not only makes them feel very valued as a customer, but also that their opinion matters to you and that you listen to them.

Obviously you couldn’t really do this with a big survey to all your customers – you could have thousands – so it would not be cost effective nor a good use of your time. 

Analytic tools  

There are loads of analytic tools out that that can help you with looking at engagement on your social media channels. These will, to a certain extent, give you details of your customers’ behaviour; how they interact with your brand; how often they buy from you and if they are a repeat buyer of a particular product.

The analytics will also tell you what kind of posts your customers like, what time of day they are online and what day of the week is most popular for your posts. This helps you decide what and when to post.  

Regarding social media, it’s always useful to listen to your customers and reply promptly to any questions or comments on your posts. 

Live Chat and Social Media

Most social media sites have the facility to have a ‘live’ chat with someone, so you could utilise this to talk to customers online. Messenger is another way to speak to them, but be careful not to bombard their inbox with meaningless messages.

The good thing about using social media channels for engagement and chat is that it is a free service!

You may also have live chat software and can use that to interact with your customers. Again, be aware not to be a nuisance!

Marketing emails

Email is perfect for engaging with your customers and for collecting feedback. If you send out a regular newsletter via email, you could always embed a survey in that communication. Or, you could send an email to your subscribers just about your annual survey.

Text

Texting is another great option for getting feedback. It’s cheap to send messages in bulk and gets a survey direct to your customers’ phone.

Customer Experience Factors

Whether you decide to send out a survey, text, message, telephone or email, there are some things you will always come across, which are absolutely crucial to the customer experience…

Pricing

What you charge for a product or service will hugely impact whether a customer will be satisfied or dissatisfied, depending on the customer. If you charge for something you don’t or can’t deliver, they will go elsewhere and will be dissatisfied with the service they’ve received. I’m not saying make sure your prices are low, no indeed not! A product or service is worth what a customer is willing to pay for it. You don’t want to be really cheap as they will question the quality of the product or service you offer. But at the same time, you don’t want to be so expensive that you price yourself out of the market.

Offer easy access to support 24/7

Customers like to have access to your products/services and know that they can contact you 24/7. Don’t just have a phone number with office hours (9-5, Monday-Friday). If you have a website, you can put an email address. Even if you’re not immediately available, at least they can ask questions at the time they want to.

Offer messenger support on social media channels, so they can message you if it’s an emergency. Most of us are online every day, even at weekends and, although it can be a pain on your day off, if you do answer any urgent queries via messenger…or agree to call the customer, you will gain more loyalty and respect. 

Educational content and training

If your products or services require the customer to learn something, make sure that there is support in place as everyone learns differently. It might be that you have a blog and post about how to use certain products or a certain service you offer.

Make sure that products or services that need training or support are covered. Include instructions with the product, give them a link to your YouTube channel where it is explained in detail, or give them a link to a Facebook group where you talk about your products or services in detail through discussions or forums.

Email all these support structures to your customers, as well as putting them in with products/services when they buy them. That way, they know they can save emails for use at a later date and don’t have to worry about losing paper copies of instructions.

Build a community on social media

Start your own social media group to support your customers with the products/services they buy from you. Communities serve several purposes…

  • Customers can talk and discuss your products/services with each other and give tips that they’ve found through experience
  • Customers can ask you questions
  • You can set up a regular forum, where you are there, ‘live’ to answer questions
  • You can advertise your new products or services
  • You can host networking events online
  • You can host training sessions, which can be ‘live’ or recorded with a link to the recording for your customers

Cancelling contracts or subscriptions  

Make it easy for your customers to change, or cancel a contract or subscription they have with your business.

It needs to be clear and concise and easily accessible. This might seem a bit odd, as you want to keep your customers, right? But if something you sell is not the right fit for your customer, they need to know that they can easily get out of it. If you don’t do this, you could risk damage to your reputation and your brand if the customer bad-mouths you and your business.

Customer incentive scheme  

You will have customers who absolutely love your products/services and who come back to you time and time again. What better way to reward them and show you value their custom, than you have a customer incentive scheme or loyalty programme. Incentives can come in all shapes and forms – it’s up to you what you choose to do.

If you run a coffee shop or café, you could give a card that gets stamped every time they buy a coffee. After buying 10 coffees and collecting 10 stamps on their card, they get a free coffee.

If you have a customer who has bought a website design from you, you could tell them that you’ll add a blog to their site for free.

These are just a couple of examples – the sky’s the limit really!

Whichever way you look at it, customer service and the experience they get when dealing with you and your business is crucial to your business’s success. So, be prepared and put in place measures that help you keep track of what your customers are buying and why. And of course, always ask for feedback! And you’ll be having your customers jumping for joy!

Attracting new customers versus retaining existing customers

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When we think of marketing our businesses, most of us focus our attention on getting new customers. It always feels more constructive and is more financially appealing to gain new customers, but unless your business is a new one, it is worth looking at how to gain more value out of your existing customers too.

New customers

ID-10058851Who are they? You may want to attract new customers to build your customer base. In order to find those elusive ‘first time buyers’, you need to think about who you are trying to attract. What kind of customer does your business appeal to? Is it men, women, families, people who like sport? Think about who you need to target.

Where are they? Once you know who you are targeting, you can look at where they are and how you can contact them – are they online or offline? Are they in a particular area? If you are selling sports items for example, you know that you could find your potential customers at the gym or at health clubs.

How do you contact new customers? If your customers are online, you could target them through social media, blogs and forums. You can advertise online in business directories or online publications.

For offline customers, you could advertise in local free papers, put out flyers in places you know they will be, such as gyms, health clubs, hairdressers or beauty salons, for example. You could also attend networking meetings or conventions where you can meet new people face to face. Always carry your business cards, so you can give them out or leave a small stock wherever you go.

Solve a problem

ID-10018705You need to be seen as an expert in your field, so try and solve a problem for potential customers. Think of something that your products can do for them – this gives them a reason to try your products. It might be that you sell beauty products and you have the latest ‘big thing’ that makes wrinkles disappear! Sell your product as a solution to a problem and people will want to try it. This could be done face to face, or you could write a specific blog on a particular product or service you offer.

Collaboration

It might be that your products or services work well alongside another product or service. So, team up with another business and sell your products or services together. For ID-10086506example, if you sell beauty products and you know a hairdresser, you could team up as a full beauty package. Link to each other on your websites and mention each other in your blogs.

Obtaining new customers is all about building new relationships, so take every opportunity to do just that.

Retaining existing customers

We all want to grow our customer base, but if you focus on growing your existing customers, you are more likely to keep them. If you have lost customers, have you ever taken a step backwards to work out why? We all spend a lot of time and effort trying to get new customers, but we must never lose sight of keeping a relationship with our existing customers.

Repeat sales

Once the initial sale has been made, it’s important to build on that relationship….thank them for their custom and remind them why it was such a good decision to buy from you in the first place. Getting to know your customers and giving them what they want will create loyalty and they will return to you again and again. I once employed a general ID-100283685builder to lay a patio…whilst laying the patio, he mentioned that he was Corgi registered, so I promptly booked him to service my gas boiler. He always arrived on time, cleared up after himself and was chatty and friendly and made me feel that my custom really mattered to him. So, when the massive wall that surrounded my property partially came down in very high winds, he was the first person I called. My point is that from doing a small job, he ensured I knew what else he could do, left a card, and was so friendly, I remembered him. I knew he could solve the problem I had and trusted him to do the work well.

Bringing back old customers

Do you have customers that you haven’t heard from for a while? These customers know you and your products already, so it’s a matter of getting back in touch and reminding them that you’re still here. You could ask them why they’re no longer buying from you, ID-100148914endeavour to overcome any problems, and show them that you still value their business. Sometimes, all it takes is to reintroduce yourself – a customer may just have forgotten that they had bought from you in the first place and immediately be interested in other or new products you have to offer. If you sell gift items, contact them in plenty of time to buy gifts for Christmas…and of course, that can be your opening gambit!

Customer Service

ID-100245378I know that I bang on about customer service in most of my blogs, but it is so important to every aspect of your business. If your customers have an exceptional experience, they will come back for more. Helpful, friendly, go the extra mile – all these things, along with an excellent product that solves their problems, will keep your customers happy…. and happy customers are loyal customers.

 

Images courtesy of 1) renjith krishnan 2) Salvatore Vuono 3) David Castillo Domenici 4) hywards 5) Mister GC 6) stockimages at FreeDigitalPhotos.net