What is Customer Loyalty? It is a state of marketing nirvana that all of us are trying to get into, equivalent to a successful marriage where both parties are satisfied with their relations. Our customers develop an emotional bond with our product through a series of repeat purchases that are all positive experiences. All that is due to the fact that we marketers pay attention to every detail and preferences they state each time they come back. And we – evolve and change while catering towards those preferences.
Customer loyalty also implies some sort of solid comfort and knowledge (from the both parties) that at times of conflict or misunderstanding – their interests will get worked out, talked over and resolved. There is trust from both sides – the merchant will not disappear or refuse service and the customer will not run off like crazy to another provider without engaging into the conversation. Now, we are arriving at the true connection between loyalty and database marketing = two-way consistent communication.
Developing the bond between you and your customers is all what the database marketing is about. Loyal customers are more valuable for your business than average because they:
- Have higher retention rates
– Have higher spending rates
– Have higher referral rates
– Higher lifetime value
– Are less expensive to serve
– Buy higher priced options
So which rate listed is more important that others? Of course, the retention rate – once your customers are gone, they are gone and it does not matter how frequently they purchased or how much they have spent.
So what can you do as a database marketer to keep them? – Use the information and data you have and personalize your services accordingly in real time. The industry has a myriad of success stories that illustrate the best known principles of database marketing. One example would be an article by the Chief Marketer’s writer, Bryan Pearson where he views and describes a successful customer loyalty strategy as a dynamic ecosystem. Which makes sense, as the idea is to surround your customers with as many touch points for service/product consumption and positive interaction. We, humans are “hungry for more resources” social beings and respond well to such environments where all our needs are constantly catered in one place at the right time by the same provider as long as the quality and variety aspects are in line with our expectations. And if you add the consistency of touch point interactions – you lock us pretty in a dreamworld of instant gratification that is prolonged!
The top three strategies that are shared in the article include:
1. Understanding your segments, where “extensive market tests definitively prove that customizing content and messages to focus on relevant products and solutions drives dramatically higher response rates and increases the profitability of direct communications to this segment. This model of testing and analysis has demonstrated real-world success in using customer transactions to predict purchase behavior.” Thus, you are able to collect those preferences, track the changes in consumer behavior and predict future purchases for similar customers.
2. Segmenting ahead of the curve, implies taking this analysis a notch up and predicting the future behavior for your customers before they realize that they have new preferences based on marginal deviations from the norm. You can track the info back to some specific event and tailor your communications to test the probability.
3. Enhancing the customer environment, goes without saying into the equation as it manifests your response to the transactional data you receive/the feedback in other words. You make their repeat purchases even more pleasant, more relevant – thus polishing the emotional connection.
All in all, it appears that paying attention pays off in the business world and the laws of evolution are attributable to a successful marketplace. Add an agile human intellect and action in between, and you are likely to follow the lifecycle of a civilization – growing your business. Isn’t it what we – marketers are here for?