Get Real Business Results from your Customer Loyalty Program

What does “managing a Customer Loyalty program” mean for your company?  Managing a loyalty program requires real attention to detail to make sure you are getting the right feedback from the right people at the right time and in the right way.  An effective loyalty program will create more loyal customers and provide real benefit to the company.  Your program should focus on generating incremental revenue, which is a far more important goal than managing survey details and scores.

So what are the key steps to driving incremental revenue?

 

Once you have a sufficient sample of customers:

1. Understand what makes a customer a promoter or detractor in each key segment (“key drivers” by segment or process area).  This is a no-brainer; just make sure to do this driver analysis by segment so you’ll know where to focus improvement initiatives.
   
   

2. Estimate the potential revenue gain by addressing those key drivers.

   • Critical step:  Calculate the value of promoters and detractors.  You need this in order to develop a business case to secure needed investment to address key loyalty drivers.  Due to the power of Word-of-Mouth, the actual value of a promoter is generally much higher than the direct sales that these customers transact with you (and the opposite for detractors).  Good survey design will enable you to derive these insights.  See our whitepaper, Net Promoter® Economics: The Impact of Word of Mouth, for insight on calculating the Word-of-Mouth impact of promoters and detractors, and look for services like Satmetrix Results Analysis to provide direct assistance.
     
     

3. Validate root cause.  You may not have the true root causes in your feedback results, so techniques such as “5 Whys” may be appropriate.
   
   

4. Plan for changes.  In this step you’ll look for solutions and often develop the cost-side of the equation in order to provide the ROI model to your executive team (the revenue model was calculated in step 2).  Be open to solutions in 3 categories:

   • Strategic (or structural) initiatives that require up-front investment in new projects

   • Operational process changes that enable follow-up and resolution (“closed loop”) with individual customers and generally deliver rapid time-to-benefit.

   • Programmatic changes in the customer loyalty program: is the survey design meeting objectives? Are you getting the right response rates from the right people?

Consider these key questions:

1. Do your post-survey analysis activities drive a revenue goal? 

2. Can you quantify the value of promoters, passives, and detractors (i.e. the value of addressing issues)?  Can you do this rapidly enough? 

Consider engaging a 3^rd party to help you with this process.  Such services will not only provide a pair of hands to help you get this done quickly, but also bring objectivity, proven methods and templates, and programmatic expertise to drive the right improvement initiatives.

Comments

[Dr. Bill Bleuel]

too salesy - not enough content for me. I would prefer to see more tangible results - a case study or at least an example.

[Steve Bernstein]

Hello Dr. B -- many thanks for taking the time to comment. Did you have a chance to read the referenced whitepaper in which we discuss Loyalty Economics and examples in great detail?