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Maximizing marketing ROI with customer behavior analysis

Retention & Loyalty Program Design

Jim's Intro:  Marketing Agencies / Consulting Groups with clients in need of a customer retention or loyalty program should beware of the following issues when selecting a vendor.

Here's a few interesting facts from the world of Customer Retention & Loyalty Marketing programs:

A rebate program (get a $5 coupon back for every $150 you purchase, for example) is not a retention or loyalty program.  It's a profit destroying program which significantly lowers the margin of your best customers and drives little or no incremental profit among others.

Better service does not by itself increase customer retention or loyalty.  Rather, good service is the minimum requirement needed to operate a profitable customer retention or loyalty program.  If your service stinks, adding a customer retention or loyalty program will make it much, much worse.  Trust me.  If you want examples, call me.  Been there, done that.  I won't design a program for a company with rotten service (anymore), period.

Customer retention and loyalty programs are supposed to be profitable, and the well designed ones are.  You can very accurately model the financial benefits of a program before it is implemented.  If you are talking with someone who says this kind of modeling is not possible, then one of the following scenarios is probably true:

• You don't have nearly enough data on your customers, and should not even be thinking of a retention or loyalty program at this juncture.  I can help you with this, by telling you what data you need and providing ideas for the collection of it.
• You have the data but you don't know how to extract the information you need from it in order to do the modeling.  I can help you with this too, by creating the proper Metrics and Reporting you need.
• The people you are talking with just don't know what they are doing, and are trying to sell you some kind of idea that is not a real retention or loyalty program.  I can't help you with this, unless you want to use somebody else for your design.

Customer Retention and Loyalty programs can be very, very profitable.  The problem is most people simply do not understand how to design them correctly, and do not understand the need for tracking, analysis, and program refreshment to keep the profitability ball rolling.

Many customer retention and loyalty programs begin life as profitable efforts, but are left to wither and grow stale, ultimately resulting in negative profitability.  If you need to redesign an existing program properly, I can help you with the project.

Finally, CRM is only a failure because people don't know enough about their customers before they implement, and end up putting too much cost in up front.  If you are thinking of going the CRM route, the best thing you could possibly do for yourself is put in a customer retention program first.  The program will tell you what you really need from a CRM perspective, and save you a ton of money down the road.  Try it, you'll like it.

I've designed customer retention and loyalty programs for some pretty successful companies and agencies, both online and offline.  Can I design one for your client?

What would you like to do now?

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