Since the cost per acquisition for customers is increasingly higher and traditional marketing and advertising strategies are less and less efficient, it is critical to develop a loyal customer base that continues to buy products and services over time. In effect, business owners and corporate managers need to develop effective customer retention programs and increase the lifetime value of each client in order to build revenue.
Tapping into the Customer’s Mindset - The Secret Behind Successful Customer Retention Programs
At a certain point, psychology met marketing and formed a stronger bond than ever before. Behavioral studies, market surveys and other activities are all meant to take a peek at the typical customer in order to find out the most effective ways of providing a valuable service. Marketers now have to learn a buyer’s habits, hobbies, pain points and other factors in order to develop better targeted ads and retention programs.
As social media platforms appeared and grew to unexpected popularity, business owners and marketers found new and more efficient ways to achieve this end in order to create the right types of calls to action and reward programs to get a high return on investment from marketing campaigns.
What Makes the Difference Between the Most Frequently Used Reward Schemes
Each kind of business has a different approach to customer acquisition and retention. While high-end companies, accessible to a fewer number of people, rely on a small group of very loyal customers they reward in an extraordinary manner, other businesses are interested in getting as many customers as they can and offering indiscriminating rewards to all of them.
There are three main types of customer retention programs: VIP programs, loyalty programs and rewards programs. Here is an overview of each program with its pros and cons.
1. VIP Program
This type is the most exclusive of all retention programs implemented by companies worldwide. Such a program is typically reserved for the oldest and most loyal customers and can usually be available after a sizable amount of money spent by the customer buying the business’s products or services. VIP programs are preferred by suppliers of luxury products and services such as 5-star hotels, restaurants, spas, airlines, car rentals and dealerships.
A VIP program offers its members exclusive access to certain facilities and amenities, special services available only to them and preferential treatment at all times. For example, the holder of a plastic membership VIP card for an airline may be ushered to a separate lounge, enter the plane ahead of everyone else and receive a special meal and excellent drinks during the flight.
Pros: These programs are meant to make people feel special. They will continue to stay loyal to the company to enjoy the preferential treatment. In turn, these VIP customers will become brand advocates, freely recommending the company to their friends and peers, even without prompting or request from the enterprise.
Cons: Maintaining a VIP program is quite expensive for the company, and it is not adequate for all business models. This approach is mostly affordable for businesses with a significant turnover wanting to expand their brand awareness. VIP programs will not earn you more clients quickly because it takes a lot of time to become eligible for such a program.
2. Loyalty Programs
If the primary goal of your company is to keep your existing customer base loyal without taking a huge slice off your margins, the loyalty is the best model of all customer retention programs available. It works by allowing the customer accumulate a certain number of points for each purchase and then offering special benefits such as discounts through the points system.
Carefully crafted loyalty programs based on different discount tiers are incredibly successful with the highest tier being comparable to a VIP program.
Pros: Any company can roll out loyalty programs based on discounts after a certain amount spent by the client regardless of the industry and specifics of its products or services.
Cons: If the customers perceive that they need to pay a substantial amount before they are eligible for a discount, they will stop buying from you. It is important to find the perfect proportion between the amount spent and the benefits received by the customers.
3. Rewards Programs
These customer retention programs are mostly used by companies wanting to acquire new customers quickly. There are no criteria for eligibility. The discounts may be offered in a printed catalog, on the company’s social media pages or through online banners.
Pros: These programs are helpful if your company wants to have a quick boost in sales and new customers.
Cons: There is no guarantee that the customers will stay loyal to your business after they take advantage of the discounted offer, and generic programs do not differentiate between new and loyal clients.
Regardless of the type of program you decide to go with, 4colorprint has your back with quality promotional materials and custom plastic gift cards to support your efforts.