Keeping the pace with customer expectation

Last Updated: September 7, 2010By Chintan BharwadaTags: customer loyalty, customer retention, loyalty, loyalty programs, marketing strategy

The significance of data is that you can see behaviour change daily. If a trend emerges from analysis of your data, it is appropriate to review marketing strategy and assess the success or relevance of the plan under way. The data and the insight they provide become an extremely precious indicator of customer satisfaction. Data linked to loyalty programs becomes a rich source of market research. It is not what people say they do but what they actually do.

Naturally, market research still has a valuable role, it is still required to determine why customers have changed but its use has become even more focused. By analysing your loyalty program data, you can recognize which of your customers visit frequently (and spend a lot) which ones visit infrequently (but still spend a lot) and which are more erratic but still “profitable”. The loyalty program and market research data will allow you to look at the impact of competitors on customer behaviour. You know all the locations of your competitors and so are able to assess visit and spend behaviour in the light of proximity to named competitors.

As part of the customer analysis assignment, you should explore whether or not your loyalty program has any impact on repeat purchase or loyalty. By doing this you are hoping to see a relationship between loyalty card usage among those customers spending and visiting stores the most. In other words, you want to be convinced that your loyalty program is being used by, and rewarding, your best customers. In theory this analysis should demonstrate that your loyalty program customers tend to visit more and spend more than average customers. You can create these as your key segments. You should also analyse if your customers are most likely to be loyal when they are offered on specific campaigns.

With this new information, you can begin to tailor your approach to each of these customer segments. It is clear that simply the differences in their visit cycle have important implications for the business. If some customers only visit once or twice a year, you need to present your offering in a clear and attractive manner. Essentially you now have to be sure that defined groups of customers are attracted to and persuaded by the offers and propositions your sales and marketing team makes to them.

This requires continual development, and testing-customer profitability is the key. However, a greater depth of understanding is needed in reviewing seasonal trends, customer characteristics by offer type, the influence of catchment area composition and competitive markets.

Additionally you should undertake the challenge in establishing not only the demographic profiles of your customers, but also to achieve a precise measure of their attitudinal and motivational approach to your product and services. As you start developing this, the potential value of the database grows substantially and allows a further dimension to be added in seeking to understand and profitably satisfy our customer needs – and importantly your competitors’ customer needs.

Chintan Bharwada

Chintan is the Founder and Editor of Loyalty & Customers.

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To achieve better sales and profits, most companies could be doing more to cultivate business from their existing customers. However, enthusiasm for customer-retaining strategies must not endanger sound customer-getting efforts. How companies balance the two is the big question. To intensify reaching old customers while still seeking new ones, for many firms, will mean changes in market analysis, planning systems, management incentives, and marketing and/or operations organization. In the rush toward growth, consumer marketers have tended to regard success as stemming from obtaining new customers while unwittingly minimizing the importance of satisfying old ones. It is time for more companies to distinguish between their getting and retaining functions, to assess the balance between them, and to remedy any deficiencies in customer retention. This process requires management to value the potential of current customers and to treat them in special ways to get them to keep coming back. Several major elements should be part of the new marketing mix for customer retention: Product extras Keeping customers frequently requires giving them more than the basic product that initially attracted them. Product extras for individual customers over time can play a sales-expansive role. Reinforcing promotions Product promotion works better when aimed at existing customers. If a marketer knows who these customers are, benefits can be obtained by giving them reinforcing communications. Sales force connections The sales force can play a decisive role in the customer-retention function. At a retail or service counter the salesperson is the focal point of the company's strategy and is the firm to the customer. Post-purchase communication A company must anticipate that some customers will encounter either minor or serious problems after purchasing. If the firm is not ready to hear and correct these difficulties, the customer may not repurchase or may cancel the the relationship. Whether company or customer is at fault, standby post-purchase activities can be instrumental in saving these customers.

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