Building a Customer Loyalty Plan, Step 3

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 first-time buyers into repeat customers

Turning the first-time customer into a repeat customer is a major milestone on the journey to earning long-term loyalty. These 14 steps will help…

1. Say thank you for the purchase. Many companies overlook this simple and inexpensive way to reassure new buyers that they have made a good choice. Best: If you send a letter, don’t use a generic greeting, such as Dear Valued Customer. Address the customer by name.

2. Seek customer feedback early – and respond quickly. Contact customers soon after a sale to see if they are pleased with the product/service. Correct problems efficiently.

Example: Recognizing that traveling executives stay in touch with their offices, one hotel calls its guests secretaries to inquire about the executives stays while they are still in the hotel. If a secretary has heard a complaint, it can be corrected before the executive checks out.

3. Use instructional mailings. One reason many buyers don’t make repeat sales is that they never learn how to properly use the product or service.

Example: A new computer may gather dust for many months. But, a mailing that is sent right after the purchase telling the buyer exactly how to use the product will reinforce his/her original interest. Or, the computer company might even offer free word processing lessons.

4. Constantly reinforce value to the customer. Good service is not good enough today. Whenever the company communicates with a customer, it should offer something extra, such as a magazine article that relates to a current problem.

And, never miss a chance to remind people what’s good about the company.

Example: Sales receipts at Office Depot read, Catalog list price would have cost you $15.75. Office Depot’s low everyday price is $8.29. You saved $7.46. Thank you for saving at Office Depot.

5. Develop a customer database—and use it. This is worth the trouble, because database marketing provides a big advantage over competitors who use the shotgun approach.

Example: A florist, noticing that customers brought flowers on a regular basis for birthdays and other special occasions, developed a tickler file to remind buyers in advance. Once, when he missed a mailing, several customers called to complain about not receiving his reminder.

6. Continually communicate your full range of services. In an increasingly complex business environment, don’t expect customers to comprehend the full range of products/services the company offers unless they are spelled out for them on an ongoing basis. Use company brochures, newsletters, direct mail letters and sales calls to keep customers abreast of the company’s current capabilities.

7. Paint a picture of future purchases. A good way to bring first-time buyers back is to create a vision that includes additional purchases from the company in the future.

Example: A decorator works up a master plan that the customer can fill in with more furniture, rugs, pictures, etc., over time. This concept has application across a wide range of industries.

8. Turn repeat purchasing into a service. When a product must be replaced or serviced by a certain time, provide service by sending the customer a reminder or a new product in advance of that date.

9. Treat customer service costs as a worthwhile investment. Money spent to strengthen customer loyalty is minimal compared with losing a customer.

Example: Ford authorizes its dealers to spend up to $250 per customer in goodwill money to correct problems the customer views as the fault of either the dealer or the company.

10. Nurture and protect communication with decision makers. After an initial purchase is made, companies often make the fatal mistake of losing touch with the decision makers and dealing only with the day-to-day users. Meanwhile, the companies’ competitors will still be talking to those who will make the next buying decision.

Solution: Create a feedback channel that gives sales reps and managers a legitimate reason to schedule meetings with the decision makers.

11. Develop customer reward programs. “Family” promotions—special events that are only offered to previous customers— can be offered via direct mail postcards, letters and phone calls, Special services, such as free car washes for car buyers, are also effective.

12 Create welcome promotions for new customers. A hair salon thanks new customers and sends them off with a We Want You Back pack that includes a brochure outlining that salon’s range of services and a card that offers rewards for recommending friends.

13. Offer guarantees. Smart retailers know that the best way to capture a customer for life is to offer a refund when needed. Product guarantees are again moving to the forefront of customer-support programs at companies such as Procter & Gamble, which recently offered to refund the full cost of Crest toothpaste if users weren’t satisfied after six months.

Bonus: With thousands of customers signing up, the company is collecting a giant database for future marketing.

Caution: Good execution is critical. Customers who have trouble getting the guarantee honored won’t come back.

14. Develop value-added promotions. A first-time purchase is a great place to start nurturing a long-term relationship.

Example: Several years ago, Steinway & Sons, whose pianos retail for between $10,000 and $70,000, gave its dealers the option of offering zero-coupon bonds of 10-, 20- or 30- year maturities as buyer incentives. When a piano was purchased, the buyer received, free, a zero-coupon bond equal to the purchase price of the piano. At the end of the period, the customer ( or his/her heirs) gets back the price of the piano and of course, still has the piano, which normally appreciates in value over the years. This promotion helped some stores increase sales by 50%.

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