- Posted by careers 22 Jan
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To continue in our series, let me quickly say here that these tips could help your businesses grow if implemented properly over time. It is also essential that you get ALL parts of your business involved, it isn’t enough for business owners or key personnel within a business to understand these principles as we aren’t primarily involved in customer interaction; our cashiers, tellers, doormen, cleaners, marketers and all customer facing personnel, need to be taught to apply these principles to ensure our businesses grow.
6. Increase Customer Lifetime Value (CLV)
Customer Lifetime Value (CLV) is increasingly being recognised as one of the most important measures of the worth of a customer. It takes into account not only the customer’s value now but the expected value over their projected lifetime as a customer of our business. The best way a marketer or a business as a whole can truly appreciate a customer’s worth is by focusing on the Customer Lifetime Value. If done right, this figure will rise as the customer never remains in the same position. For example, imagine a university student opens a savings account on day 1 for his ‘pocket money’ if the relationship is maintained by the same bank, 5 years later, that same student will have a salary account for his income which will be more than is ‘pocket money’ and account balance grows as he progresses in life. If targeted right, we could see the same customer opening a joint account for himself and his wife and a savings account for his kids. The same applies to other businesses, what a customer buys today as a single lady will change over time as the customer gets married and has children. Being able to identify customers through a loyalty programme means being able to monitor long-term customer lifetime value, and being able to identify the demographic, socio graphic, and even purchase profiles that define the most profitable customers – and that knowledge enables you to target and develop more of them.
7. Build real customer relationships based on relevance
Building relationships is crucially important but not always as straightforward as it might seem. It has been said that relationship marketing is powerful in theory but troubled in practice – an unpalatable concept but probably one with which many marketers could identify. Building a relationship with customers can lead to improved behavioural loyalty and thus to increased bottom-line profits. If you examine the human elements of a long-lasting relationship you’ll find several elements, all of which can be approximated by careful collection and analysis of loyalty programme data. The key element, trust, can be built up by always excelling at customer service and problem correction, and by providing consistently good products and services that suit the customer’s unique needs. Surprise and delight can be achieved by delivering personal offers for the most profitable loyalty programme members, such as birthday discount shopping days.
8. Set fairer tiered pricing policies
There was a time when manufacturers recommended a price for each item, and retailers simply charged that price. Any differentiation then was purely on convenience, ambience, product range and quality of service of the retailer. But the data from a loyalty programme can help formulate pricing structures. If enough best customers are happy to buy a product at a particular price there seems little point in reducing that price simply to attract cherry-pickers. The effect of changing prices can also be studied
9. Intelligent response to competitive challenges
A good loyalty programme’s ability to tie purchases to individual customers allows quick and accurate identification of customers who defect when new competition opens nearby. They can then be enticed back with customer-specific special offers or even direct contact. In his book, Loyalty Marketing: The Second Act, Brian Woolf describes how one fairly small, older store had to face up to a competitor opening a much bigger store on the same parking lot. In anticipation, the small store was extensively remodelled, causing considerable disruption. Over the period of remodelling (a matter of several weeks) turnover dropped by 40%. However, a loyalty programme enabled management to identify regular shoppers and mail them a letter thanking them for their patience and enclosing some special offers. All but 183 customers returned to the store. The store management team then sent handwritten invitations and a US$10 gift certificate to those 183 customers. All but three returned. After the new competitor opened, the smaller store’s whole customer database was mailed an offer containing US$5-off coupons for US$50 orders in each of the following twelve weeks. Any customer using all twelve received an extra US$10 certificate. The result was that sales actually rose by between 6% and 7% over the months following the new opening. The competitor’s store (which was approximately twice the size) achieved less than half the sales of the remodelled store. This shows the power of knowing who your customers are.
10. Improving product range and stock selection
Knowing what products best customers use / buy frequently helps choose which lines to stock and which lines to expand on. Restaurant and Supermarket owners for example will know what products to stock and what products not to stock, they will also know who’s buys these products and how frequently they buy the products therefore, will channel funds into stocking the right products to make meals his customers buy frequently or stocking products his customers buy a lot of from his supermarket.
Next week, we shall continue the series by sending you tips 11 to 15. I use this opportunity to thank you all for taking time to read and respond to our newsletters, your responses have been overwhelming and encouraging. Thank you once again.
Once again, thank you for taking time out of your busy schedule to read this, please feel free to reach me by commenting below should you have any questions or comments.