3 steps to keep your best customers coming back

The Loyalty Effect

A recent study by Bain & Company revealed that a 5 percent increase in customer retention could potentially boost your average customer net value by 35 to 95 percent. Talk about a "wow" statistic, but it certainly makes sense. History has shown that by giving your most loyal and profitable customers incentive to buy more often, they will reward you with significantly more business. A customer loyalty program, of course, is a great way for your business to boost sales and retain clients. If you own a dry cleaning operation, for example, you could offer a regular discount to repeat customers. Here are three steps to get a loyalty marketing program off the ground:

1. Find your "best" customers. Specifically pinpoint which customers generate the most profit for your business. Then, determine why they prefer your products or services to your competitors' and what changes might make them even more loyal to your business. You could survey your customers by mail or email or ask them questions in person (we prefer the latter). Make sure you remain aware of changes in customer preferences as your business grows.
2. Categorize your customers. Organize your customers into four groups, from your highest spenders to the lowest, and determine which products or services appeal most to each group. This will help you identify where to focus your marketing and where there is room for growth.
3. Provide incentives and rewards. There are many ways to develop an affordable rewards program. For example, personalized thank-you notes or providing discounts after a large purchase are both effective. Email-only offers may provide your customers with an incentive to give you their email address. If your business has a specific down-time period, you could offer your customers increased discounts at that time to stimulate sales. And holiday or birthday offers always reassure your customers that your company appreciates their loyalty at special times of the year.