What is Customer Loyalty Program?

What exactly is Customer Loyalty Program (CLP)? A customer loyalty program is a way of promoting existing customers to purchase more from the company and keep a long term relationship with the company. By offering various products and services at a fair price, companies can increase their RCR (return on sales) by delivering more and attracting more customers. However, if customers perceive a company to be less than honest in its dealings, then they are likely to turn elsewhere for a company that really does value their business and their happiness.

When implementing customer loyalty best practices, it is important to keep in mind what actions produce tangible results rather than intangible ones. A reward program, for example, will usually be most effective when used in conjunction with other tools such as offers and discounts. It is important, however, to not confuse reward with payout. When customers have achieved a certain level of goal or criterion, they should still be offered the same benefits for further achievement. In most cases, this is done by way of a coupon or gift card.

A major part of customer loyalty programs is to track and analyze customer data. Tracking what is already known is important, but what is new or under-recognized can also provide valuable insights into how customers use the product and which items they frequently purchase. By tracking customer data, companies are able to monitor consumer usage trends, identify patterns that may indicate current or future trends, and in many cases, develop improved services for managing and delivering the goods and services more efficiently. Some common types of data collected include:

– Shopping History – The date and time each customer buys from a company is critical to defining a customer loyalty program. Understanding why customers return can help determine if the same set of people continue to purchase particular products or services from a business. For example, is a specific product designed for the male gender or the female gender? By understanding which gender buys a certain item or service, companies can tailor promotional merchandising and other efforts to appeal to the right audience. In some cases, companies employ demographic research to determine if certain groups of customers are more likely to purchase a particular product or service.

– Targeted Sales and Marketing – Use customer loyalty best practices, businesses can create a marketing campaign that targets a specific group of customers. For example, a clothing company may develop an email list for men that contains only the products that they purchase for their frequent buying activities. While these lists might initially seem simple, many companies find that they benefit from implementing a series of effective techniques and methods. This includes analyzing the recipients of the emails to determine who is most likely to purchase the product or service, developing specific messages that encourage customers to purchase from the company, and making use of customer data to determine which advertisements bring in the most business.

– Utilize Customer Data – One of the primary goals of customer loyalty programs is to allow businesses to improve their understanding of their customers. In doing so, they can develop and implement techniques that make their marketing and sales efforts more effective. Some of these include developing lists of customers who frequently purchase a specific product or service, analyzing purchase patterns to determine whether a product is purchased most often by a certain age group, analyzing purchasing habits to determine whether customers frequent a store that carries the product or service being advertised, analyzing which advertisements to draw in customers, and studying what types of advertisements result in the least amount of purchases. As well as examining purchase patterns, companies should also examine customer service history and feedback to help them understand whether customers are pleased with the level of service they receive. Knowing what makes customers tick can help businesses create campaigns that inspire positive results.

– Promote Products and Services Together – Many customer loyalty programs offer incentives for promoting their products and services together. Whether offering a coupon for customers who purchase a certain number of products or offering a discount for customers who bring their friends and family with them, these programs foster long-term customer relations. As well, by offering consumers a discount or free item when they bring a friend or family member with them, these programs are encouraging existing customers who have yet to purchase a product or service with the company to do so. The increased sales of these services and products as well as the resulting increase in clientele strengthen and enhance the company’s ability to maintain its competitive advantage and fend off potential new competition.

Customer loyalty programs are essential for any business that wishes to attract, retain and motivate customers and forms an important part of CRM Suite. They allow businesses to provide more personalized services and respond to the needs of their customers in a more efficient and effective manner. Furthermore, customer loyalty programs allow businesses to create loyalty within their own employees as well. Through these programs, employers encourage their employees to purchase products and services from the company, which in turn helps build strong loyalty among employees to the company and its ideals and goals. Overall, customer loyalty programs allow businesses to improve their customer satisfaction, improve customer retention and build customer loyalty.



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