What Are Customer Loyalty Programs?

Customer loyalty program, or frequent loyalty program, refers to a series of purchase discounts, value-added services or other rewards provided by chain companies or cooperative companies to customers who consume relatively frequently. The purpose is to reward loyal customers, stimulate consumption and retain the core. Customers are an important way to implement relationship marketing.

Customer Loyalty Program

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Customer loyalty program

Independent points plan ^[1]

1. Determining the planning goals The planning goals are determined to be clear: Do you want to increase the average order or number of orders? Do you want to build sincerity? Do you want to prevent brand conversion? Do you want to attract new customers? Do you want to prepare customized mailings? Each goal may lead to the implementation of different customer loyalty programs, ^[2]

1. Value the relationship with customers ^[2]

1. The customer loyalty program itself requires huge investment ^[2]

Measurement of customer loyalty

According to the value of customer loyalty, customer loyalty can be measured from the following aspects: ^[3]

1. Repeat purchases by customers

In a certain period of time, the more times a customer makes repeated purchases at a store, the higher the loyalty to the store, and the lower it is. Factors such as the geographical layout of the store, the type of product, and other factors also affect the total number of repeat purchases from customers to the store. Therefore, when determining the reasonable limit of this indicator, it must be treated differently according to the nature of different stores, and cannot be generalized.

2. Customer purchase selection time

Generally speaking, the shorter the customer's selection time, the higher the loyalty to the brand of this store's product; otherwise, the lower the loyalty to the brand of this store's product. For example, customers who drink Coca-Cola for a long time have formed a preference and have a high degree of trust. When they need it, they often buy it by name and never choose it. When using the time index of customer purchase and selection, the impact of differences in product structure and use must also be ruled out in order to draw correct conclusions.

3 Customer sensitivity to price

For the products of favorite and dependent stores, consumers have a strong tolerance for price changes, that is, the sensitivity is low; while for the products of non-loved and dependent stores, consumers have a weak ability to bear the price changes, that is, sensitive Degree is high. When applying this standard, we must pay attention to the impact of three factors on the necessity of the product, the supply and demand of the product, and the degree of product competition.

4 Customer attitudes to competing stores

According to the customer's attitude towards the competing stores, the loyalty to a certain store can be judged from the opposite side. If customers have a good opinion and strong interest in competing stores, it means that the store has low loyalty, and the former is likely to replace the latter when buying; if customers do not have a good opinion of competing stores and have little interest, it indicates that they are interested in a certain store. The loyalty is high, and the purchase direction is relatively stable.

5. Customer tolerance for product quality accidents

Any kind of store products may have quality accidents for some reason, and even brand-name products are difficult to avoid. If customers have high loyalty to a certain crystal brand, they will be tolerant and sympathetic to the quality accidents that occur, and will not reject this store's products. Of course, when using this standard to measure customer loyalty to a certain door, we must pay attention to distinguishing the nature of product quality accidents, that is, serious accidents or general accidents, frequent accidents or accidents.

6. Customer increase and acquisition rate

Customer increase is the ratio of the number of new customers to the existing base customers. Customer acquisition rate, that is, the ratio of the number of customers who actually became customers to the total number of all the people who won over. This is mainly to measure the indirect effects of implementing customer loyalty programs.

7. Churn rate

The historical record of churn rates shows who is the most promising customer base. Recognize that attempting to retain customers who threaten to leave is also a waste of resources, and investing in improving service quality for customers who should actually be abandoned in the business may also have side effects.

Evaluation of customer loyalty programs

An effective loyalty program should consider the following key factors: integrate loyalty projects into the corporate culture; use the information and knowledge of existing customers to understand customers to obtain a larger customer share; and when appropriate, be specific and appropriate Communicate information to the right customers; set achievable goals; plan to measure all results.

The effectiveness of specific customer loyalty activities depends on the nature of the product or service, the frequency with which the customer purchases the product or service, and the rewards given to the customer by the business. When implementing a customer loyalty program, the store manager should make the following decisions:

1. What is the goal of the plan? Is it to increase the average purchase or number of purchases? Is it to build good faith? Is it to stop the conversion of the brand? Is it to attract new customers? Is it to prepare customized mailings? Each goal may lead Implementation of different customer loyalty programs.

2. Who are the target groups?

3 Stores should develop an effective communication strategy to facilitate the implementation of the plan. For example, mass communication.

4 Stores should have an implementation strategy to ensure that employees are well-trained and ready to implement the plan.

5. Stores should measure and continuously improve the performance of loyalty programs to ensure that these programs achieve their goals at a reasonable cost.

The most important feature of a successful customer loyalty program is that customers can see the added value. If customers can't see these, then this plan is doomed to failure. Added value must provide customers with the benefits they need.