ABOUT CLIENTS’ LOYALTY
Do we always build clients' loyalty when we place our stake on price? Let’s clarify who the “loyal customers” are. These are clients who are currently ready, have made or are making the purchase. It is not worth wearing rose-colored glasses and state that everyone who has made a purchase is a loyal client. To make such statement it is important to consider when the purchase was made, what did the client buy, and how regular.
Why is it important to know when the purchase was made? If the purchase was made several months ago, it’s not your loyal client.
What did the client buy? If it was the promotional product sold at the reduced price, it’s rather a client prone to participation in promo campaigns than a loyal client. It also might be a person buying low price segment products and tracking price fluctuation. This client is loyal today but tomorrow this client switched to your competitor.
How regular are the purchases made? This indicator permits to understand the systematic character of purchases and to define the frequency of visits. The regularity of visits answers the question: whether this client is loyal or it’s just a client of single purchase?
How quickly can a loyal client lose loyalty to you/ your chain/ trade outlet/ brand? Loyalty can be lost at a moment due to the low service quality, absence of discounts (when a competitor has!) and even bad mood. It’s necessary to understand that permanent loyalty is a myth. Yes, there are customers who are loyal over many years, there are those who visit only your chain but they often forget to take a discount card or they simply don’t have it that is why you can’t identify those clients.
The loyal clients are considered for some reasons to be closely related to profit gaining. The loyal clients come more frequently, don’t switch to competitors, the loyal client is ready to spend more. There is cause to query why are the loyal clients having maximum discount don’t bring maximum profit in percentage terms? It often happens when loyal clients pay less but demand more.
If a buyer generated profit in the past by accumulating bonuses, scores, discounts, it does not necessarily mean that he/she will keep on raising your sales level if the maximum rate of motivation in loyalty program has been already achieved.
Most likely, that friends and colleagues of a loyal client will use his/her bonus card and you will be forced to sell goods them at a reduced profit margin. It's not a loyal client; it's just a client projecting his/her possibilities granted by a loyalty program on other visitors. At the same time, new clients who could increase their savings on bonus card, they do not come.
Analyze your client database, monitor not just quantity of receipts but also the frequency and nature of the purchases. Create portraits of your customers, and you will see a lot of interesting in their behavior. The analysis of customer activity will allow you working more efficiently with the loyalty program and involve new clients more targeted.
Based on the materials of media outlet "Pharmacist - Practitioner"