Why Loyalty Programs are Important for Your Social CRM
How can a loyalty program help your Social CRM campaign? Fred Reichheld — author of several seminal books on loyalty, including The Ultimate Question 2.0: How Net Promoter Companies Thrive in a Customer-Driven World — reports that “a 5 percent improvement in customer retention rates will yield between a 25 to 100 percent increase in profits.”
Wow, that’s a statistic you can’t afford to ignore! The key is to build a program that’s highly relevant to the customers you serve.
Loyalty data is one of your company’s best assets, no matter its size. By collecting data about your loyal customers, you can understand such things as the following:
Customer trends in real time
Promotions that impact your loyal customers most
How to increase conversion rates (the rate at which a lead is turned into a customer) among new customers based on your experience with loyalty programs
How do companies view the value of loyalty programs today? According to a survey by SAS and Loyalty 360, here are the top goals of loyalty programs:
To increase customer spending
To reduce customer loss
To turn customers into advocates
These are difficult goals to pull off. The ability to achieve them is enhanced by the fact that you can reach these customers directly on social media platforms. Your CRM can accumulate the data you need to make a connection with your customer meaningful.
After you’re convinced your business needs a loyalty program, remember that your customer needs a reason to join and participate. You must create a reason for your customer to stay faithful. You want customers to value their incentives and engagement to the point that they wouldn’t think of buying elsewhere.
You should also be aware that loyalty programs can have a negative effect. The stakes are higher. They raise customer expectations about the type and quality of the service you offer. If you anger a customer in a loyalty program, you’re likely to lose that person forever.