Loyalty Programs Are'nt
Just for the Big Guys;
They're for Everyone

Give back a little. Get back a lot.

Some pundits say loyalty programs aren’t working as well as they should. Well what in the world is really working as well as it should? Most things can stand a little tweaking. And sometimes, it’s the user that needs the tweaking. As one of my mentors used to say, “The best of anything is yet to be invented.” There’s always room for better products, programs and services and the ways they’re used.

If you dip in the kitty and invest 2% to 10% in a loyalty program that prevents customer attrition, that kitty will stay healthy. But loyalty programs aren’t just about buying loyalty. They help you gather the data you need for customer relationship management and modeling. It’s the synergy of the three that helps fine tune your marketing messages, strategy and tactics.

Loyalty programs can also be a defense tactic. If your competitors offer programs and you don’t, you better crank up one of your own. Just make yours better. How?
Don’t just copy the other guys, or offer bigger rebates. Your program, like your business, needs a unique selling proposition.

For example, it seems ironic but making customers pay to join your program may make them more loyal. Big boxers like BJ’s and Sam’s Club have annual membership fees that give you the privilege to shop in their stores.

BJ’s Inner Circle membership is $45 a year. If you upgrade to their Rewards Program for $80 a year they give you a credit of 2% on all qualified purchases.

Pizza Hut is another good example of a “Pay and Stay” program. When those big on pizza pay their annual fee of $14.99 to join the program they automatically get a free large pizza. And Pizza Hut gets names addresses and phone numbers for their data base and special offers.

L.L. Bean doesn’t charge for the privilege of shopping with them. They start with the goodies right up front. When you apply for their no annual fee L.L. Bean visa card, you’re rewarded with $15.00 of L.L. Bean Coupons. You also receive free shipping on all orders, free monogramming, and earn 3% on all purchases toward L.L. Bean coupons which are awarded in $10.00 units.

Use promotions to attract new customers. Use a loyalty program to keep them. Use CRM and modeling to build your business.

Customer Relationship Management

isn't just for the big guys.

It's for everyone.

Some entrepreneurs get so busy chasing new business they get sloppy about taking care of what they already have.

For most businesses, the big opportunity

is to keep your best customers.

It’s much easier and more economical to sell a satisfied customer than to find and develop a new one. According to a study by the American Management Association, about 65% of most firms’ business comes from the customers they keep. They also say it costs about five times more to get a new customer than to sell another widget to one you already have. Those two reasons are enough to make you want to keep what you’ve got. But there’s more:

With a CRM program you can gather data and use it to develop models of predictive behavior that help you hone the timing and the message of your marcom. This brings you closer to predicting the R.O.I. for your efforts. What’s more, happy customers can be powerful advocates that help drive new business to your door.

Of course, CRM programs are not without critics. Some cite a high rate of failure by programs that don’t deliver as promised. But isn’t it quite possible that some people who bought into the program were expecting a silver bullet? CRM is not a silver bullet. It’s just one more weapon for the well-stocked arsenal..

Maybe customer relationship management isn’t the right term. It’s really about human relationships. And the heart of all human relationships is effective communications. So maybe we should be talking about CCM, or customer communications management.

But why get bogged down in semantics? The term CRM is good enough for the firms that research the subject. Forester Research has predicted the investment in CRM will be up to $73.8 billion by next year. Others. predict the investment will hit $101 billion next year.

For the little guy, it’s important to recognize that CRM can’t be done with just a change in attitude. Monday morning pep rallies can motivate, but CRM requires a process. It’s a process that’s not about you. It’s about them. It identifies customers, differentiates them, interacts with them, and helps you attempt to please them ----and retain them.

Here’s a suggestion: Log on to Amazon Books. Search for “A Crash Course in Customer Relationship Management.” You’ll find it on a $4.00 digital download of a Harvard Management Newsletter. Click it and in a blink it’ll be on your desk top.

It’s only five pages, but it’s meaty. It’s also a good starting point before you go to Google where you’ll get the rest of the story.

Marcom & Strategy

A lead is a terrible thing to waste;

get the lead (Pb) out and follow it up.

When leads get old, they get cold. Today’s hot prospects can cool in a hurry. Interest levels drop. Priorities change. They get other offers. They forget about you.

Everyone knows qualified leads should be followed up promptly, but the way they’re handled often leads to delay and lost opportunity.

One year, a client invested $240,000 in business publications advertising. They generated over 1,000 inquiries, yet only a handful was ever tracked back to a completed sale. The director of marketing and the national sales manager never implemented a system that would have told what they should have known…a system that would have led to more effective measurement and communications, and more sales.

Some companies are successful in spite of themselves, and this was a very successful company. Yet they would have been far more successful if somebody really had a handle on what happened to every single one of those leads that cost $240.00 each.

In their defense, every inquirer received a fat packet of literature with a thank you cover letter. Each was added to the mailing list. The leads were distributed to area reps who passed them on to distributors; distributors passed them on to dealers; dealers passed them to salesmen.

The problem was, everyone felt the leads had been handled. And that’s just it. They had been handled, but not tracked to a final resolution. By the time a lead trickled down to a salesman, it was history.

When the issue was raised, lack of time and personnel was the excuse. That’s why follow-up and tracking must be automated or at the very least delegated to a honcho who makes sure those expensive leads are not wasted.

Now you can argue that the media budget did more than just generate leads. It did all those nebulous things agencies like to talk about: building brand recognition, awareness, impressions, image, reinforcement of the sales message, and warming the doorknob for salesmen. All true. But still wouldn’t it be nice to know what happened to every one of those 1000 leads?

Somebody has got to mind the store.

If my call is really important to you,

have a live person answer the phone

Sometimes investing in the right automated phone systems is good business. But investing in systems that tick people off is dumb.

Customers and prospects are such precious things, why install a system that frustrates or angers them? Other than warning you that “this call may be monitored for better service” have you ever been asked what you think of the program?

Yes, I know such systems save money. One vendor of a voice recognition system says live calls (i.e. real people) costs from $2.50 to $8.50 each. They say they can save their clients 50% to 75% of that cost. But is this key touch point the place to save money? I don’t think so.

Most folks can handle a short and sweet menu without blowing their cool. But many automated programs are guilty of overkill, and it’s the caller who gets killed.

Okay, on repeat calls once they’re familiar with the drill and know when to punch the appropriate key, it’s not so bad. But on that first call they may have to listen to the whole menu at least once and then most of it again so they don’t miss the right key.

I am all for automation when it doesn’t separate you from your customers. But don’t turn your business into a vending machine. You can’t establish a relationship and start a dialogue with a machine.

Henry Ford said, “If there is any one secret of success it lies in the ability to get the other person’s point of view and see things from his angle as well as your own.”

Automated phone service is COMPANY- centric thinking.
CUSTOMER-centric thinking is the way
to win friends and influence people.

One of the many reasons I love L.L. Bean is that they usually have enough people on hand so a live person answers by the fourth ring. And they’re not wasting resources. When the phones aren’t ringing the service people don’t just sit around. They have other duties.

The point is, callers shouldn’t have to do The Dance of the Seven Veils before the system rewards them with a talking head---a talking head with answers.

Everything that saves money is not justified. In a market where getting another touch point is a challenge, why put on a girdle? Next to belly-to-belly selling, great phone operators are great assets. Wouldn’t it be nice to let them start doing their job by the fourth ring rather than waiting to greet callers already seething from a system that doesn’t feel their pain?

If you need a rationale for more operators, charge it off to customer retention or relationship management. That’s a very good investment.