Designing a loyalty program
Designing a loyalty program is considered both as a science and an art. The science concerns nailing the program economics and mechanics, such as how customers enroll, how members accrue points and how the benefits and rewards are structured. The art is the marketer's opportunity to differentiate the program, aligning it with its brand and customers. However, it is customer loyalty, and not customer satisfaction, which is key to the success of an organization, and customer loyalty, is fostered when an organization excels along two dimensions:
Many firms focus on rewarding customers who have repeat purchases. Such reward programs have their place in assuring customer loyalty. However, if the product or service doesn't meet customer needs, no reward program will keep them returning. For success in the long run, an organization must:
The first step in customer loyalty research programs is formulating the objectives. Next, the current state of customer loyalty needs to be documented. Depending on the state of the company's data bases, the latter figure may be difficult to ascertain. Then, data collection projects, such as survey questionnaires and other research tools, must be developed. The goal in these tools is to find out customers' satisfaction level and how many customers are defecting. Follow-on detailed research should help determine why customers are defecting. Once the feedback is captured and analyzed, the findings must be communicated to the root source where improvement is needed. The result: better products and processes that foster customer loyalty and long run profitability. While periodic in-depth research helps to identify needed changes in service product design, continuous listening to customers' perceptions about completed service transactions allows a firm to keep a watchful eye on the quality of the service or product.
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