Building a Customer Loyalty Plan

The average company loses 20 to 40% of its customers every year. Well conceived and well executed loyalty programs for attracting, retaining and winning back high value customers are essential for any company to succeed. Build your own plan around these customer loyalty stages.

Turning suspects into qualified prospects

Turning qualified prospects into first-time buyers

Turning first-time buyers into repeat customers

Turning repeat customers into loyal clients

Turning loyal clients into advocates

Winning back lost customers

Turning suspects into qualified prospects

Establishing a profitable base of loyal customers depends on attracting the type of customer who can buy again and again over a long period of time. Consider these steps in identifying and selecting your most profitable markets:

1. Survey the total market. Continually identify all types and categories of people, industries, and others that might use your expertise or product.

2. Segment your markets. Break down your list of potential markets into groups that have common characteristics. You might list people by their professions or industries by their products, for example.

3. Analyze your markets. Discover as much as you can about the market groupings you have segmented. Find out what they need, what they want, what they fear, and who they buy similar services from. Find out everything you can that will help you evaluate how much potential they offer to you and how you can to about selling to them.

4. Study the competition. Find out how your successful competitors go about selling. While you will not want to copy their approaches, you need to know what works in your market. Knowing what your competitors do also helps you decide how you will be able to cut into and capture some of their market.

5. Stratify the market. Rank various market segments by priorities. Your primary market should be the market segment you can reach the easiest with the lowest investment and with the greatest expectation of return. In the long run, return should be measured not simply on the basis of volume or sales but by profit. A number of factors can contribute to profitability, including the target group’s proven responsiveness to marketing, its growth potential, its readiness and ability to make buying decisions, and the ease by which it can be reached through the media.

6. Do an in-depth market analysis of your top markets. Uncover as much information as you can about your most likely suspects, including what they read, what trends they are concerned about, and how they think. Find out who in your field they consider to be best and why.

7. Analyze what marketing vehicles are most effective. The fewer resources a company wastes marketing to people who will never be prospects, the more it can invest reaching and selling to its genuine prospects. Asking new buyers, “How did you hear about us?” can help you zero in on ways to reach new customers. Frequency is they key to effective penetration Studies have shown that when people hear about your company and products four or more times, they perceive you as credible. Choose marketing vehicles that enable you to afford and achieve such penetration. Carefully consider your marketing budget. If your funds allow you only a “flash in the pan” approach, you will probably be wasting your money and need to rethink your choice. As a rule, the more focused and smaller the target market and the more clearly a company can identify individual prospects, the more cost efficient marketing becomes. Such direct marketing techniques as mailings, telephone calling, and personal selling can be very effective. On the other hand, if the target group is large and homogeneous, then mass-marketing techniques like television, newspapers, and radio work more efficiently.

8. Test your markets. To get a better idea of what will really work, you need to contact a few prospects in each of your high-potential markets. This will tell you which ones are easiest to sell to, which approach works best, and how receptive the prospects are. You may find that what you thought was your best market is really not as good as your second-best market. If you evaluate your sample in terms of cost, efficiency, and successful approach, you will learn a great deal that can save you time and money later.

9. Analyze what is doable. A recent sales force productivity study of 192 companies and nearly 10,000 sales representatives reported an average of seven calls to close a first sale. For most businesses, a “threshold” number of calls is required for each sale. Anything less than this threshold requirement makes all previous activity a waste. In establishing sales projections and quotas, consider such factors as how many contacts are required to reach threshold, the average number of calls per day a salesperson can make, and the number of sales days available per period. Considering these factors can help you realistically plan for sales results and help avoid the disappointments that accompany overstated projections and unrealistic expectations.

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Source: Jill Griffin’s Customer Loyalty: How To Earn It, How To Keep It