Customer Experience Articles
Contact Vox to discuss how we can help you create a comprehensive Customer Experience that drives bottom-line results dramatically higher.
| ‹ ‹ Previous Article | Article Index | Next Article › › |
Giving Thanks the Right Way
By Bridget Optholt
November 19, 2007
Giving Thanks to Loyal Customers … Sincerely
This time of year, we’re bombarded by incentives positioned as thank yous: turkey giveaways, first-time customer discounts, gift with purchase, switch and save, free gift cards. The trouble with many of these offers is that they’re only geared towards new customers.
Last month, we discussed the importance of customer retention. In fact, statistics show it costs six times more to attract a new customer than to keep an existing one. So how can businesses do a better job thanking the customers who actually stick around? These days it’s all about loyalty programs.
According to Jupiter Research, more than 75% of consumers belong to at least one loyalty program. Once reserved exclusively for industries whose products or services constantly change and expire; such as airlines, credit cards and hotels, loyalty programs are quickly becoming the norm in every industry. Today companies like Starbucks, Virgin Mobile and Maxwell House offer special incentives to their most loyal customers, encouraging them to buy more products and services while also strengthening and reinforcing customer loyalty. Companies hope positive reinforcements will prevent customers from switching to competitive brands, even when faced with attractive lower-price offers.
But there is the catch. Not all incentive programs necessarily help retain customers. Rewarding loyal customers is obviously a good idea, but positioning the program properly is critical to its success. An effective loyalty program needs to present its benefits as unique and special. Customers will automatically notice if a company attempts to pass off any old generic discount as a loyalty reward.
Diluting loyalty benefits to a “buy ours and get a discount next time” mentality drives customers to buy based on price and does nothing to build the customer-brand relationship. In fact, these types of “loyalty programs” can actually weaken customer loyalty as customers can smell insincerity from a mile away and may grow to resent a company.
Effective customer loyalty programs can build and strengthen a brand’s power by encouraging customer involvement. For example, a pet food brand can build and maintain customer loyalty by sponsoring a series of obedience classes. Events like these position the company as caring and eager to go above and beyond what’s expected. Customers are left with the sense that they, and their pets, are truly cared for and looked after.
Companies starting loyalty programs must also allow sufficient time to work out any kinks and make necessary changes to succeed. When launching a loyalty program, a company is telling customers that it values and appreciates them and wants to build upon and strengthen the customer relationship. If the program doesn’t work, and the company simply pulls the plug, they’re basically telling customers, “Sorry, we decided you’re not as important as we thought.” Or even worse: “Hey we didn’t make enough money out of this so we’re ditching you.”
As the season of “giving thanks”, approaches, keep in mind that giving thanks can take many forms and, if you look a little harder, you can probably tell who is and isn’t being sincere.
Bridget Optholt is a Consultant at Vox, Inc., a customer experience research and consulting firm. Contact her through the feedback form on our Contact Us page. Copyright 2007 Vox, Inc. All rights reserved.
| ‹ ‹ Previous Article | Article Index | Next Article › › |
