The Cost of Loyalty

by Nancy Fraser

Published on this site: December 3rd, 2005 - See more articles from this month

How many loyalty cards do you have in your wallet right now? Do they mean anything to you or are they just more stuff making your wallet strain at the seams?

No, this is not just about the merits of loyalty programs. It is about the cost and the struggle to retain customers and whether it's worth it or not.

We have all had nightmare customers; think back to the beginning of the interaction. Did you bend the rules; maybe you had no rules at that point in your businesses evolution? It's possible that the transaction started off right and somewhere along the way went sideways. Did you worry about what they thought of you, your product, or service and bend over backwards to control the damage? What was the outcome of that? Are they still your customer or after you gave away the farm, did they disappear forever?

It's human nature to want everyone to see value in what you have to offer. It's easy to assume that everyone is your customer; they are not. The greatest respect you can show for yourself is to identify who your ideal customer is and work to attract that customer.

Common thought is it's an expensive process to go out and get new customers. ...but sometimes, you have customers that are too expensive to keep. You think in terms of not excluding someone who may want to do business with you. If you have accurately identified the characteristics of your ideal customer and use the messages that are most effective at motivating them in your marketing and advertising, you will attract more customers that will appreciate how you do business, see the value in your products and services and act as your unpaid sales force.

If you feel a loyalty program should be a part of your marketing initiatives, there is no rule that says it has to be available to all of your customers. Why not make it available based on specific criteria and goals you set? Rather than struggle to be everything to everyone, isn't it a better to have customers strive to be whom you want as a customer?

Companies with the greatest loyalty factor are not always the biggest businesses or market leaders. Those that market to a specific niche generally have the have the greatest loyalty. Their positioning is not based on price but on the specific characteristics and needs of the market they serve.

While you are in the building phase of your business, defining what you do, acquiring/developing new products and services, new customer acquisition is crucial. Later as your business matures and your focus on product development is less intent, customer retention becomes more important.

Regardless of where you are in the life of your business be true to your core customer and stop bemoaning the ones who got away. Sometimes you can count yourself lucky for the ones you lost

Nancy Fraser is the President of Nota Bene Consulting. With over 25 years in marketing & advertising, she leads a team of specialists in graphic/web design, SEO, marketing, advertising and branding. If your marketing efforts are hit and miss you will appreciate the Free information available in the Notable News. http://www.notable-marketing.com