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The other day I went to Costco to replenish several items in our home. As I was checking out the cashier called someone over who pulled up my purchase records. Turns out that if I upgraded my membership I could earn money back on my purchases; enough to more than pay for the upgrade. Why not?
Now why would they offer to give me money back on my regular purchases? Because they know that now I will choose Costco over the grocery store or another discount warehouse. They increase their volume without advertising or marketing. This is a customer loyalty/reward program that works. It effectively costs them nothing and they’ve increased the odds that their current clients will buy more.
Panera Bread Bakery-Cafes had a loyalty/reward program where you could get a free cup of coffee after the purchase of ten cups. They had to discontinue the program because someone created counterfeit cards and offered them on the internet.
So, what can we learn from these examples? First, it’s a great idea to offer a customer loyalty/reward program. It’s less costly to keep current clients than it is to find new ones. Add to that the idea that you should try to capture all of the business you can get from your current clients and you’ve got the foundation for a loyalty program.
Second, make sure it’s something easy to implement and explain. If it’s too complicated no one will use it because they won’t understand it. Moreover, you don’t want to create a plan that is costly.
Third, create a program that can’t be hi-jacked. Consider the Panera example. The loyalty card was too easy to duplicate so someone did. Unfortunately, there are unscrupulous people out there.
Interestingly, participation in loyalty/reward programs is up in this recession. According to Colloquy research. “U.S. consumer participation in rewards programs is on the rise across all demographic segments, . . . Consumers are leaning on loyalty programs to stretch household budgets further by earning rewards for their purchases.“
What does this tell us? That using loyalty/reward programs can be an effective strategy for increasing revenues even in a recession.
Beyond the lessons learned from the examples above is the understanding that in order to have customer loyalty you must provide an excellent client experience. It will do you no good to have a program if your product, service, and/or customer service is sub-par. Think about it. If the experience isn’t good there isn’t a program in the world that is going to keep clients coming back for more. So, in reality, customer loyalty/reward programs begin with customer service.
Tuesday, July 21, 2009
Social Media - The Downside
Does Your Business Have A Facebook Fan Page?
Facebook is getting some serious attention these days and for good reason. There are some interesting ways to stay in touch with your friends and reconnect with some people that you may have "forgotten" about over the years. You can also keep in touch with family and allow people who you do business with to see something a little more about you. While it can be fun and interesting, it can also be incredibly dangerous if you don't show some restraint.
One of the real business applications of Facebook is the business/fan page. I have seen quite a few of these pages popping up around companies that haven't had a social media presence until someone decided to put the page together. I find it funny what a Pollyanna attitude people can have when it comes to social media, though. No one likes to consider the dark side of doing something like this.
Dark side? What could possibly go wrong by putting some innocent banter about a company on Facebook? What could possibly create more harm than good? There are two main concerns.
The first is Business/Fan page neglect. There is plenty of evidence of what I call the Facebook "rush." The company page is started by a peppy, overzealous person who doesn't truly understand that they have potentially pried the cap off a huge can of worms. There is a month or so of furious activity and a ridiculously high level of expectation that the pace and quality can be maintained. Next thing we know, the employee assigned has left or has lost interest. The updates slow and the quality slides. Suddenly, there is a house that was once the pride of the neighborhood that has fallen into ill repair.
Neglect leads to the next problem, the Facebook landmine. The moment that no one is minding the Facebook shop, it happens: unhappy customers turn into your biggest anti-fans. They sneak in and start to subvert the efforts of the company page to create a whole new problem, Facebook Reputation Monitoring. If you or someone in your company is only paying lip service to the maintenance of the page, a negative comment could sit on a "fan" page for an extended stay. I've seen this. A bad review and no response on a business page is just bad business. It happens a lot more often than we want to think.
So the takeaway here for Facebook is that if you are going to get in, you must stay in. You swing the door wide-open to a lot of really good things. That door swings in two directions, though. You can just as easily create a customer service nightmare. You'd better be completely sold on the possibilities, because the surprises from some of your "fans" could be more trouble than it's worth.
Facebook is getting some serious attention these days and for good reason. There are some interesting ways to stay in touch with your friends and reconnect with some people that you may have "forgotten" about over the years. You can also keep in touch with family and allow people who you do business with to see something a little more about you. While it can be fun and interesting, it can also be incredibly dangerous if you don't show some restraint.
One of the real business applications of Facebook is the business/fan page. I have seen quite a few of these pages popping up around companies that haven't had a social media presence until someone decided to put the page together. I find it funny what a Pollyanna attitude people can have when it comes to social media, though. No one likes to consider the dark side of doing something like this.
Dark side? What could possibly go wrong by putting some innocent banter about a company on Facebook? What could possibly create more harm than good? There are two main concerns.
The first is Business/Fan page neglect. There is plenty of evidence of what I call the Facebook "rush." The company page is started by a peppy, overzealous person who doesn't truly understand that they have potentially pried the cap off a huge can of worms. There is a month or so of furious activity and a ridiculously high level of expectation that the pace and quality can be maintained. Next thing we know, the employee assigned has left or has lost interest. The updates slow and the quality slides. Suddenly, there is a house that was once the pride of the neighborhood that has fallen into ill repair.
Neglect leads to the next problem, the Facebook landmine. The moment that no one is minding the Facebook shop, it happens: unhappy customers turn into your biggest anti-fans. They sneak in and start to subvert the efforts of the company page to create a whole new problem, Facebook Reputation Monitoring. If you or someone in your company is only paying lip service to the maintenance of the page, a negative comment could sit on a "fan" page for an extended stay. I've seen this. A bad review and no response on a business page is just bad business. It happens a lot more often than we want to think.
So the takeaway here for Facebook is that if you are going to get in, you must stay in. You swing the door wide-open to a lot of really good things. That door swings in two directions, though. You can just as easily create a customer service nightmare. You'd better be completely sold on the possibilities, because the surprises from some of your "fans" could be more trouble than it's worth.
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