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7 Myths About Customer Loyalty Programs

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A company thrives on customers. As much as it is important to gain new customers to keep the company running, it also important to maintain the old customers. Gaining a new customer costs a lot whereas having a repeat customer cuts back on the cost of acquisition and helps in increasing profit margins. But, books on customer satisfaction issues, quality of service and customer relationships winners are fed by myths. Here are a few points about these preconceptions and really act on customer loyalty programs.

1) All satisfied customers are loyal!

It is a fact stated after survey that the satisfied customers are not 100% true! To retain customers, meeting is not enough! So you must be good on both accounts, quality of products and communication.

2) In your customer base, you have all the information about customer loyalty programs

Wrong! The really useful information is usually in the head of your business or sales reports that are generally not included in your database.  To run an effective customer loyalty programs, one must first take stock of the data in its customer base.

3) Loyal customers contribute to the growth of your CA through word-of-mouth.

Wrong! In most business areas, clients do not consult them, and word-of-mouth mainly concerns exceptional products that come out of the ordinary.  In addition there is evidence that customers are more likely to speak of a bad experience (negative word-of-mouth) rather than a good experience.

4) Customer Loyalty programs are a barricade for customers

Wrong! The customer loyalty programs that are not designed to re-consume the client is a waste of money. If, after analyzing your loyalty program, it shows that your customers do not consume more, the company has spent money for nothing.

5) Customer loyalty increases market share.

Wrong! The companies with the most loyal customers are the most important in their market. For example Harley Davidson, MAC users are very loyal, but are a minority in their market (niche market). There is no direct correlation between customer loyalty and market share.

6) Building customer loyalty is a one person job.

Wrong! It is not just the customer support or the sales man who is responsible for building and maintaining customer loyalty. It is the job of everyone who works in the company. It is imperative for everyone in the company to work towards achieving a reliable and good quality product which will help in maintaining the trust of the customer towards your company, thereby ensuring customer loyalty.

7) Loyal customers are only loyal to one brand.

Well, that’s not the case entirely.  Let’s have a closer look. Each of us have loyalty cards from more than one store and sometimes also have loyalty cards of competing stores. We buy stuff for our homes from more than one store. Mostly customers are split loyals and alternate between choosing two brands from their evoked set. Hence, using this information to maintain the status in their evoked set is equally important as being the only brand in their evoked set.

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