Customer Loyalty Management for Small Business

As a business owner, you know that customer loyalty is essential: Happy customers return more frequently and spend more over time, increasing your profits and ROI. According to Bain, in some industries, just a 5% increase in customer retention can produce more than a 25% increase in profit. 

So why do many companies continue to focus on acquisition at the expense of retention? It could be that they believe customer loyalty management to be time-consuming or difficult, but with the right tools and expertise, it doesn’t have to be. 

What is Loyalty Management?

Customer loyalty management is the system or processes your business uses to engage and retain existing customers. It’s made up of your overall strategy and goals, as well as all the tools you use, like loyalty management software

Think of it this way: You’ll first set customer retention goals and other KPIs, like a certain number of purchases over a certain period of time or an average order value that increases by a given amount. Then you make a sale. Your customer enters their email address, and you follow up with a personalized discount offer for their next purchase. You then invite them to join your loyalty program. They’ll receive advanced notice about product releases that may interest them, and every time they make a purchase, they’ll earn redeemable points. If they haven’t made a purchase in a while, they’ll get a reminder email. Not happy with a purchase? Your cheerful customer service team is there for them. This is all part of customer loyalty management.

Many people consider the term customer incentive program management to mean the same thing, but there are differences. Your actual incentive program is just a piece of your overall customer loyalty strategy. And while it is essential, you also need to think about your company’s branding, email strategy, content creation, customer service, and more. So what is loyalty management, really? It’s a holistic strategy that touches every aspect of your business to keep customers coming back. 

Why is Customer Loyalty Management Important?

It’s easy for businesses to get distracted by the immediate boost in numbers that customer acquisition and conversion provide. On the other hand, customer retention is a long-term growth strategy, but it’s just as important. Loyal customers choose your brand based on how it makes them feel, not necessarily on price, meaning they’ll often spend more — and spend more frequently. 

Loyal customers will also provide your business with good reviews and recommend you to people they know. These two things are becoming more important especially since digital transformation has paved the way in customers turning to the internet to share their feedback and do research rather than solely trusting marketing or salespeople. These trends are driving an increase in the loyalty rewards industry, which is expected to grow by more than 12% between 2021 and 2028.

How Can I Manage Customer Loyalty?

Customer loyalty management goes beyond sending coupons. It actually starts with acquiring the right customers, then turning them into brand loyalists.

Build a Strong Brand

Your brand is the voice and the face of your company. It’s what your customers see first and what they connect with emotionally. The strongest brands are more than a product — they’re an idea, a vision, and a mission. Apple’s “Think Different” motto positions it as an innovator and a challenger. Coca-Cola brings people together. Nike empowers its customers to achieve their dreams. The answer to “what is loyalty management?” begins with building a brand that connects with your target audience.

Focus on Customer Service

There’s another strong brand whose identity is focused almost entirely on customer service: Amazon. Along with quality and value, customer service is central to their mission, as it should be for every business. An efficient, satisfactory experience that resolves the issue and keeps the customer happy will leave them with positive emotions. That can improve your “brand halo,” or their likelihood to buy other products from you, but it can also improve your metrics like your Net Promoter Score (NPS), which you’ll use to measure the success of your program. 

Respond to Feedback and Reviews

We touched on the importance of online reviews above, but in order to leverage those reviews into real change, you’ll need to make them part of your customer loyalty management strategy. Respond to negative feedback with customer service information and reply to positive reviews with thanks. Let good customers know you appreciate them, and keep track of negative feedback so that you can use it to improve your processes. When customers feel heard, their loyalty may increase.

Create a Loyalty Program

There are many different types of loyalty programs, from cash-back offers and tiered rewards to paid programs. No matter what you choose, your loyalty program should include a way to segment customers based on their activity and the amount they spend, so you can provide the most active customers with the best rewards. This is where customer incentive program management comes into play. It allows you to keep track of each customer’s tier or points and automatically send out emails with offers and discounts when they reach a certain level. 

Use a Loyalty Management Software

Software has made up a large part of the growth of the loyalty rewards industry. It can help you make sense of your customer data, track your KPIs, and align all of your departments around your common goal: customer retention. But which one to choose? Salesforce recently introduced a Loyalty Management feature that allows you to set up and manage loyalty programs, including eligibility, benefits, vouchers, rewards, and redemptions. Plus, it connects with your other Salesforce integrations and business systems for a unified customer loyalty management strategy.

Need help getting set up with loyalty management software? You don’t have to go at it alone. At 5P, we can consult with you on your overall strategy and help you integrate software into your business. The ultimate goal: Automate and streamline your customer loyalty management program to improve your efficiency and your profits. Contact us today for a free consultation.

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