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It Starts & Ends With Loyalty

Posted on 6.07.2006

Loyalty programs are for merchants of any kind - online or offline. As most customers easily understand them, they are becoming a key tool for retail CRM but must be fully integrated and exceptionally user-friendly.

Ultimately there is no guarantee that the effort it takes to strengthen dealer and customer relationships will ever improve profit margins, but by establishing a legitimate opportunity to actually do so, companies can boost sales of specific products which relates positively to "share-of-wallet" in the long term. With that said, why shouldn't you reward purchasing behavior? Other than the argument that consumers are completely fickle, many merchants use loyalty programs because they yield positive results.

Investing in Loyalty
It's the economics of consumption - all over again. Sure, the more ways customer economics can be explored (offer more opportunities to buy in this case) the better informed enterprises will be to create a strategy that allows them to invest the optimal amounts in different customer groups (which also helps in refining acquisition strategies).

To utilize loyalty programs to the benefit of your enterprise, understand that you should not create a loyalty program without proper analysis. Obtain information on the annual revenue/expense per customer and the lifetime revenue/cost related to acquisition. This will help to develop an appropriate suite of solutions, establish key performance indicators, identify return on investment through enrollment rate, and model rewards based on per customer spending and transaction frequency.



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