Good Idea to Reward Loyal Customers

“It’s a lot less expensive to keep a loyal customer than to go out and acquire a new one”. – John Nee

You should pat yourself on the back if there are even a handful of loyal customers in the larger customer base of your company. These are not easy to gain or retain and it is a good idea to reward loyal customers, such that they not only remain with your company but also get their friends and associates to enter into business with you. Of course, to reward loyal customers should not translate to bribing them to crack a deal or in any way constitute an unethical business practice. Providing great customer service is of immense value to any company – the reputation and ‘staying power’ of a company has now come to depend on personalized service and customized products. Offering freebies, discounts, previews to special launches, loyalty programs and other such special ‘offerings’ make for great ways to reward loyal customers and shows them that they are valued and special for the company. Taking such customers for a lunch or dinner or sending them a gift of value often proves highly effective in maintaining strong relationships with valued customers.

Customer loyalty is not easy to gain – but when a company gains it, it is visible when customers share information about the company with their friends and family – especially through social media. Customers proudly flaunt labels and brands – they would carry products, wear clothing and shoes, flaunt accessories and may be even have the brand labels stuck to their vehicles. With so much free advertisement and brand endorsement, a company can reap immeasurable benefits and it would be a good idea to, in turn, reward loyal customers such that they continue their patronage and gain new customers for the company. Such brand endorsement displays the emotional connection a brand has built with its customers and spreads awareness about the company and its offerings in customer segments that the company may not even be aware of – thus increasing the opportunities for conversions.

There is no doubt that showing appreciation for loyal customers is vital. So how can a company drive loyalty and what are the most effective yet ethical ways to reward loyal customers? Most companies make the mistake of offering attractive schemes and incentives while trying to attract new customers and at the time of on-boarding new customers. They forget sometimes, to acknowledge and care for the loyal and repeat customers, which in turn could result in them losing these invaluable customers. Loyal customers know that their business is important to your company and hence expect that you show them appreciation on a consistent basis. To reward loyal customers does not always mean that your company ‘showers’ them with freebies or gifts. You can reward them by remembering their name, the preferences they may have, their buying history, by putting them on loyalty programs, and maybe seeking their advice when developing a new product or service line. These actions show them that your company truly appreciates their association and is committed to making every interaction more memorable and pleasant for them.

It is crucial to reward loyal customers since loyalty is a factor of trust and dependability and trust enables customer brand advocacy. When customers trust a company / brand, they would be more likely to use it repeatedly. However, trust can be ephemeral if not handled well – a company must pay close attention to what their customers say and use their insights to provide top class experiences and high quality offerings. By doing so consistently, even the occasional customer would move to becoming regular and regular customers would become vocal brand ambassadors.

As mentioned several times, people shop to satisfy many needs and top among them are emotional ones. To gain customer loyalty, a company must first understand the emotions and needs of its target audience. Customers want to stay with a company, as they too understand the value of loyalty – and a company that can effectively reward loyal customers with incentives and value-added service will be able to increase the intensity of loyalty and the number of loyal customers.

Some companies give loyal customers freebies when they purchase many items in a single transaction. The buy one get one free is a great method to encourage buying and keep customers coming back for more. For example – a friend has been buying the same brand of clothes washing liquid for many years now. The reason – the product’s quality has remained constantly good and they keep coming up with schemes – currently a buy one get one free scheme.

Another great way to reward loyal customers is to seek their feedback and insights before launching a new product or service. Doing so would not only make them feel important, but would also instil in them a sense of responsibility and ownership for the new offering. This in turn would insure future buys and maybe even word-of-mouth recommendation – they would want to make a success of the thing they were directly involved in from the time of its conception. Invite your best and most loyal customers to discussion groups – ensure that your company pays attention to providing the highest level of courtesy and hospitality at such events. These groups are also great for networking – customers would get to meet other people who could be interested in doing business, thereby getting them opportunities to increase their business without much effort.

Reward loyal customers by giving them better and preferential terms of service and maybe even timelines for payment. We have mentioned before that a few big and loyal customers – about 20%, account for at least 80% of a company’s business and hence it would be prudent to offer them better service. Many companies would offer extended service hours, dedicated resources for particular customers, waivers on minimum orders and other such incentives and ‘rewards’ to let customers know that their loyalty and business is highly valued. Customers may not be aware of products or services that could go well with the purchases they make. A company can reward loyal customers by offering them these ‘additions’ free of cost to add value to their large spends.

Loyal customers most often also become brand ambassadors and are happy to provide referrals, which increases the chances of gaining new customers. To reward loyal customers, a company can incentivize these referrals – this would give them even more reason to recommend the company and its offerings to others. Ensure that every message that goes out from the company has a ‘call to action’ – that is a social media button, which would make it easy for them to share and spread the word about the company. Every new customer that comes through a referral would be a customer with a lot more trust – since their friends would have recommended the company. This puts fewer burdens on the company to try to convince the new customer of its dedication –your loyal customers should be rewarded for doing this.

In the competitive business environment, every company needs to keep its customers for as long as possible but creating loyalty is not easy. Keeping customers makes good business sense but to reward loyal customers makes it a lot easier and ensures that they repeat their buying behaviour – this would translate to increased revenue and profitability.

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