Establishing customer loyalty: Gifts and loyalty programs

It is more cost-effective to have a small number of devoted customers than to be constantly trying to win new ones. Here are some guidelines.

The aim of any company should be to establish the loyalty of as many customers as possible. Generating repeat purchases actually costs a fraction (one-fifth) of the sum which needs to be invested to win a new customer. A loyal customer also presents fewer risks for the company, because you know their financial situation and their ability to pay invoices on time.

They also become a brand ambassador, singing the praises of products to their friends and family. This is extremely valuable, as most consumers are influenced by the opinion of their peers.

Who are loyal customers?

The Pareto principle states that 20% of a company's customers generate 80% of its sales. Similarly, 80% of problems are caused by 20% of customers. The majority of customers lie between these two extremes, returning to the company for its prices or convenience, but who might easily defect to the competition.

It is therefore more worthwhile to focus your efforts on the 20% of your most profitable customers, leaving the 20% of problematic customers to one side and continuing to court other customers without investing too much time or money.

To locate these ideal customers, you need to analyze your sales (you can create a file of customers, listing all of their purchases and preferences), but also look at people who are most active on social networks and advertise the company on Twitter or Facebook. The website Klout makes it possible to measure the online influence of these opinion leaders.

Automatic habits to adopt

  • You want to create a relationship with your loyal customers. You should therefore remember them (and their tastes and preferences), call them by their names, treat them like VIPs and anticipate their demands.
  • You should offer them discounts, special offers or a customized thank-you gift.
  • From time to time, you should make an exception or bend the rules to please them.
  • Provide follow-up after the sale. Contact consumers to find out whether they are satisfied with their purchase and whether there is anything else you can do for them.
  • Mark important occasions (Christmas, birthdays) with a card and/or voucher for a discount on their next purchase.

Loyalty programs

You can formalize customer loyalty by establishing loyalty programs which reward repeat purchases. These programs also help gather information about your customer base and what these customers are buying. There are various models:

  • A discount or reward when the customer spends a certain amount on a single purchase (“free delivery or 10% off your next purchase when you spend at least CHF 50”)
  • A discount or reward when they reach a certain level of spending over a given period (usually one year)
  • A discount or reward when they accumulate a certain number of purchases (loyalty card)
  • Surprise gifts (“because you've visited us 10 times this month, this coffee is free”)

Sources: Small Business Marketing Kit For Dummies, Barbara Findlay Schenck, John Wiley & Sons Inc, 2012; I Love You More Than My Dog: Five Decisions That Drive Extreme Customer Loyalty in Good Times and Bad, Jeanne Bliss, Portfolio Trade.


Sign up to our newsletter to stay informed (on the top right).


Information

Last modification 24.10.2018

Top of page

https://www.kmu.admin.ch/content/kmu/en/home/concrete-know-how/sme-management/marketing/looking-after-customers/customer-loyalty.html