Category: Customer Relationship Management

Do You Need a Loyalty Program?

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The most recent Loyalty Census from Colloquy pegs loyalty program membership in the US at more than 2 billion, up 16% from 2008. Perceived value of points earned through loyalty programs is estimated to be $38.83 billion. With this much activity going on, you may be tempted to offer a loyalty program for your business too. But do you really need a loyalty program? I’d like to address this question in this post. Let’s start by taking a look at the pros and cons of having a loyalty program.

Key Advantages of Having a Loyalty Program

  • It encourages consumers to concentrate their purchases in your company so that they can reach a reward faster.
  • It increases switching cost so that consumers who have already earned points through your loyalty program are less likely to jump ship to a competitor.
  • Compared with other promotions such as price discounts, a loyalty program incurs delayed promotional cost, because consumers make purchases first and get rewards later only after they have accumulated enough points.
  • Related to the above cost issue, not all points earned through a loyalty program translate into reward costs, as there will always be some consumers who never reach the reward threshold or who never redeem their points.
  • A loyalty program offers a way to capture consumer transaction history and can lead to more in-depth understanding of your customers.
  • If you have a sizable business such as an airline, a loyalty program can be a revenue source as you can sell program currency (e.g., miles, points, etc.) to partner businesses.
  • A loyalty program, when properly designed, can make your best customers feel appreciated and become more loyal.

    • Continue reading “Do You Need a Loyalty Program?”

Google+ Circles for Managing Customers

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It was really nice spending the last few months with my newborn baby. As every parent I know tells me, “Kids grow up so fast! Cherish this time!” But in between the joy and wonders of being a mom, a part of me missed the excitement from the constantly changing online social media landscape. So when I came out of the hiatus, I was glad to find a major development on the horizon: the Google+ project. According to Google, the project is supposed to “make sharing on the web feel like sharing in real life”.

After receiving a Google+ invitation from a friend, I immediately started digging into it to see if it has more potential than Google Wave, the once hyped product that has since retired into the background. My first impression when getting onto Google+ was: this looks a lot like Facebook! But after looking into it a little further, I started to see several critical differences between Google+ and the Facebook concept. I don’t plan to get into all that in this post, as there are many great articles out there discussing the Google+ concept. Instead, I want to share with you how Google+ can potentially evolve into a great tool for managing customer relationships in the online social media space.

Google+ Circles

The Old Way

To do that, let us first look at how brands now engage consumers on Facebook. Most likely, this is done through a Facebook page, where consumers can “like” a brand to show their appreciation and support of the brand. Through such a page, a business can share information such as useful articles and upcoming promotions with consumers, and at the same time consumers can interact with the business and other consumers by asking questions and posting comments. This is all good, but it happens in a very undifferentiated fashion. Everyone on a brand’s Facebook page sees exactly the same information, and a business needs to sift through tons of questions and comments to identify the priority issues that need to be addressed. This is neither very effective nor efficient. Continue reading “Google+ Circles for Managing Customers”

When Your Business Talks Too Much

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Lured by Cyber Monday deals, I bought something from ToysRUs.com for the first time this past weekend. Besides the order confirmation email, I received six additional promotional emails from the company, in just three day. That averages about two a day. Annoying? Sure! But ToysRUs is not alone. In the last one to two years, I have seen major retailers dramatically increase their email promotion frequency. Just a few weeks ago, I had removed myself from the email lists of well-known retailers such as New York & Company, Victoria’s Secret, to name just a few. Some of these companies were sending me daily if not more email messages about something on sale. It appears that either the recent economic recession has turned these retailers desperate, or a new marketing bible is out there somewhere teaching these retailers to bombard consumers with emails.

Is this strategy effective? Business aside, let me ask you this: have you ever met someone who can talk your head off and don’t know when or how to shut up? If you can’t picture that, think about Adrian Monk’s upstairs neighbor in the hit TV show Monk. What do we do when we meet people like that? We usually try to avoid them like the plague. I did with those retailers. When I asked my students what they do, they said they simply deleted the emails. I am sure this is not what the retailers intended.

Cover Ears
Photo by Flickr user oddharmonic | CC2.0

Now, I am not discounting the effectiveness of email marketing. When used appropriately, emails can be an effective and low-cost way of communicating with customers and keeping a business in consumers’ mind. But just like most things in this world, too much is not a good thing. Let me present a few reasons why daily or too frequent promotional emails are neither necessary nor effective: Continue reading “When Your Business Talks Too Much”