Loyalty Program Strategy

A loyal customer leads to repeat customers and builds brand value, so it should be a surprise to find that loyalty programs are on the top of most retailers strategy map then any other single marketing program, The commercial benefits of loyal customers are well known by brand managers. With all the different companies offering new strategies in loyalty programs it is very important not to lose sight of the basic strategy behind implementing the loyalty program.

Segregate your customers
All business are not born equal your business has its own unique process and your customers are different from your competitors in some stubble way. The goal when you are segregating customers is to identify a great customer from your average customer. Look at key indicators they may be in the form of which locality the customer’s are coming from what does your customer do, what category of items does he purchase, etc. For Ex if you find a huge segment of your customers coming from a particular locality you can work with your advertising strategy to find out what works for that locality. For ex if a customers buy the Xbox from you it does result in a repeat customer since he is going to come back for games and you can target him based on his preference, The strategy of any program should be to identify the customer groups.

Define your customer groups
Each customer group behaves differently spend time to examine each of these groups define elements which make up this group. Your loyalty Strategy should be based on addressing the requirements of each group understand that Loyalty is a emotional experience so spend time with defining the profile of the group Try to keep larger groups unless you have a lot of resources who can spend time in working with each of the groups

Set Goals for each segment
Once you have defined your loyalty customer groups set goals to achieve for each of the groups make sure that your low level strategy to achieve your goals fits within the overall brand image. The goals and targets should be a measurable; it could be higher average billing, more customer referrals, and more frequent visits, growing the group or trying to bring about a certain behavior in the group. Document all the work you do so that you know what works for one group and what does not work priorities based on success and return on investment, what works for one group may not work for another group. Most Customer strategy fails because they are one sided and ignore the customer.

Develop loyalty strategies to accomplish each objective, the strategy for each group could look very different don’t worry about it as long as it does not dilute the brand image or your high level strategy.

Concluding
At this point you know what works and what does not work you will have a set of strategies, which works. If the methods are consistent, then you could impose an overall strategy that is a  common set of the strategies that worked for different groups. But most times it is very difficult to see what works for all groups so you have a series of lexical analysis that accommodates the majority of your loyal customers. For a successful loyalty program takes a lot of iteration and research.

You have to build internal support for your loyalty program and then only evaluate potential partners’ expertise in loyalty program implementation to see if it improves and justifies your loyalty program and has a chance of survival.