Once you decide to implement a customer loyalty system and you have all the involved people aligned around the four main benefits of having such a system (see The Four Basic Benefits of a Loyalty Program), then you can start working on the strategy.
Typically when thinking about customer loyalty, businesses immediately start discussing points and rewards, which really undermine the power of a customer loyalty system. Before even thinking about the incentives and the rewards, you need to figure out your data capture strategy.
A data capture strategy defines how you collect and manage information about your customers. A well thought of data capture strategy will deliver high quality customer data, allowing you to better understand your customers and enhance your relationship with them.
Capturing information about your customer does not mean you need to gather up every type of demographic data from every single person. You only need to capture the data that’s “relevant” and “relative” to your business and your sales objectives. You also need to make this data capture meaningful to your customers as well. You can’t just start asking for volumes of information unless it seems important to them as well.
One Golden Rule we recommend is this: Only capture data that you can actually USE to trigger a marketing campaign or make a decision about a “next step” within a marketing sequence.
There are three basic guidelines that should guide your data capture strategy:
- Depth – The amount of data you have about your customers to make your communications relevant
- Breadth – The volume of customers you have on your database and can therefore have a conversation with.
- Quality – The deciding factor. Your database may be full of customer records appended with all manner of information, but if it’s inaccurate it’s useless
It is important to identify what information you require to allow you to meet your objectives. At UrbanBuz, this is one of our starting points and this is something we call defining your “ideal” customer profile.
A good practice is to start by working out what information is most important. From there, you can then investigate where this information is currently captured or where it may be in the future. Don’t fall into the trap of collecting data because you think it might be useful. If you can’t think of a use for it now, don’t collect it. Asking for too much data may alienate your customers.
You can also use transactional data to get a far richer understanding of who your customers are than they actually want (or are able) to tell you. With sales data, you can build customer segments. You wouldn’t offer deep discounts to customers who were already loyal to your store and willing to pay full or close-to full price (that’s just giving away money). Your more infrequent customers may need different incentives to come in and purchase. Segmenting your customers can allow you to send the right offers to each customer.
In order to maximize the number of customers who would provide you with their information, you should make it as easy as possible for customers to provide that information.
It is important not to push the customer to provide information at your own schedule. They need to do it when they feel like it. So for that you need to enable them to do that across different channels whether while browsing or waiting at the store, on your web site, on your Facebook page, or on their phone.
Also people expect something of value in return for entering their contact details. Incentivizing your audience needn’t be costly. You might provide a quick digital offer or voucher that gets emailed to them once they fill out their profile.
The key here is to make it quick and easy for customers to provide you with information at their own time by integrating your data capturing process with all your different channels from Point of Sale system to web site and Facebook.
Approximately 1 in 10 customer records you store will become out of date every 3 months. This has implications not just for the data that you collect (for example ask for a date of birth rather than age) but also for how you maintain it. A badly timed or irrelevant communication could at worst result in reputation damage to your brand. It is therefore not sufficient to just collect customer data well; it must also be diligently maintained.
You need to make sure to provide your customers with the capability to update their information and to have regular campaigns reminding them to make sure their profiles are up to date and most importantly to remind them “why” they should update their profiles.
While data collection does take some work and commitment, the payoffs can be well worth the time.
- You can exponentially increase the response rates on your marketing campaigns
- You can increase your per-visit transaction revenue
- You can identify and improve your relationship with your best customers
- You can provide useful information to all of your customers
To have a solid Data Capturing strategy in place, always make sure:
- Decide what data you need and prioritize
- Don’t ask for everything at once – build it up over time
- Make it easy for customers to give you information
- Incentivize your customers to part with their details
- Streamline the process from point of capture to storage
- Regularly remind customers to update their data and about the benefits of doing that