7 steps to creating customer loyalty

Most successful businesses are built around repeat customers – not one-time purchasers. To create repeat customers you have to make sure you are putting the right offer, in front of the right people, at the right time.

This has always been a fundamental marketing principle, but advances in technology have now made it a necessary survival skill. Whether we’re talking about digitally revitalised direct marketing, or more sophisticated loyalty based programmes, we’re seeing more and more brands beginning to explore this space in an effort to bring their customers closer by offering increased value to the relationship.

At Ogilvy we’ve recently launched REDBOX our own integrated database marketing solution, which is currently running loyalty programmes for BP’s Wild Bean Café, Life Pharmacy, Placemakers and others. These programmes are making a real difference to these businesses by providing us with invaluable insight into actual buying behaviour and alerting us to potential sales or marketing issues in close to real-time.

Dynamicbusiness.com featured this 7 step plan to creating customer loyalty on a post a couple of years back. I thought it was a nice simple way of structuring a high-level approach to programme development. Hope they don’t mind but I’ve re-worked it a little as follows:

Know who your customers are, what they want and what they don’t want. Sounds obvious but it’s a mistake many make and it’s often hard to reverse out of once a programme has been constructed.

Make sure your offer resonates with your customers, understand how they want to engage, how they would like to be rewarded and how they would like to receive communication. A loyalty programme is trying to influence behaviour, make sure you have the right motivation in place up front.

Be clear about what you want to achieve. Setting the KPI’s up front will allow you to tailor the programme effectively. You may want to segment your customers and personalise offers. Or you may want to track purchase history in an effort to understand behaviour and create offers dynamically from this information.

Structure rewards so that they change purchase behaviour in order to benefit the business. Don’t reward customers for ‘spending as usual’. Whether you’re looking for an increased basket size, or greater shopping frequency, use your loyalty programme to drive the behaviour you’re looking for.

Don’t create an administrative nightmare. Your loyalty programme should be easy to run and not be a drain on profit. Consider both the rewards structure as well as the cost of running the programme itself. The more you can automate, the better.

Make it easy. Customers expect to be able to self-manage their profiles and perhaps even manage redemptions. An online solution will deliver this and more, and will assist in reducing the cost of running the programme.

Communicate regularly. They two axes of a successful loyalty programme are usage and redemption. Structure communication around both of these axes in order to maintain individual user momentum.

Make sure your communication includes clear, concise and attractive offerings. Keep it simple.

If customers lapse or leave the programme, you need to find out why. Ask them for their feedback and then take it on board. If possible, use triggers to identify potentially lapsed customers and structure separate communications around rescuing them.