Avoiding Customer Loyalty Nightmares

The talk about customer relationship management paints a rosy picture. We all know everything about our customers, right? Sure. But building a database marketing system that can support your customer loyalty program is no easy task.

The devil is in the details. There are three stages of customer relationship management. You need to have a plan in place, with a phased approach, to build technology to identify your major customer groups — and a communications program that will keep them happy. Consistent with these three stages of marketing, there are several nightmares you might encounter along the way.

Stage one. Focus on identifying these customers and solving their problems in the early stage of your loyalty program and your system development:

* The Monogamist. This is your customer who takes your loyalty program more seriously than you do. How do you keep him happy? Make sure the loyalty commitment starts at the top of the company and works its way down to everyone who interacts with that customer.

* The Elephant. He has a better memory than you. Solve this problem by remembering what he purchased and when.

* The Moving Target. Get your mailing file in order early on, and have a process that continually updates the file. Not only will you waste postage, you'll lose customers if you can't find them.

* The Centipede. How easy is it to identify multiple accounts or purchases from one household? This can be the biggest nut to crack in locating your truly loyal customers. Don't shortcut the individual and the household-level identification process, and don't forget to plan for dynamic householding of your file on an ongoing basis.

* The Irrelevant. This guy won't respond to anything, so don't waste your money. Get a good contract management system in place so you can identify him early on and put him on the bottom of your loyalty pyramid.

Stage two. When you have your bases covered, move on to these customers who can only be identified with a more mature system:

* The Aristocrat. This customer wants what he wants when he wants it or he will move on. Having a strong customer history file can keep him happy.

* The Stealth. This customer kind of sneaks up on you and recognizes you before your database has recognized him. Make sure your updating process is dynamic enough to recognize a good customer early in his customer cycle, or he'll be buying from your competitor tomorrow. And allow enterprise access to the data for each customer communication.

* The Exiled. He will leave even though he is basically happy with you. He wants to be appreciated. Identify him and keep in touch — you might win him back.

* The Insomniac. Now more than ever, it's vital to be available on demand. Like the computer catalogers who take orders until 3 a.m. for next day delivery, get your 24/7 systems in place.

* The Perfectionist. He is part of a group that is growing faster than any other group. He expects zero defect. Pay attention to all product and communication details so you don't get thrown out of the game before it begins.

* The Promise-Keeper. Believe it or not, he will expect you to deliver exactly what you say you will. Like the online frequent flyer tracking systems, make sure your tracking systems are timely, accurate and available.

Stage three. Refine your systems to not only keep your customer happy and coming back, but to be able to identify profit opportunity in your loyalty program:

* The Gimmee Now. When there is a problem, he expects it to be fixed — now. A successful loyalty program empowers every employee to do whatever it takes to make the customer happy. Even if it's not in the job description.

* The Pampered. Not every customer requires the best price. Some want feature upgrades or just special handling. Design your database to track what your customer really wants, and collect data over time so you can predict what keeps him coming back.

* The Butterfly. This customer has suddenly increased his purchases to become one of your best customers. Do you know who he is? Building behavioral change triggers into your system will find him early on, so you can thank him and reward buying behavior.

* The Newly Converted. As catalogers know, your newest customer may be your best for purchase or referral. Have a system in place to recognize him, thank him and ask him to invite his friends to try your product.

* The Twelfth Man. This is the most dangerous customer (or ex-customer). While a happy customer tells three people, an unhappy customer tells 10. Make sure your program has a scoring system to identify when a customer might be unhappy — and a follow-up system to get back into this customer's good graces.

The task of implementing a loyalty program can be very daunting. But the keys to success are a detailed plan, 100 percent management support, a phased approach, a unified vision at all customer contact points and a dynamic process of data management and analysis.

With these in place, your customer will keep coming back for more. And with these daunting nightmares behind you, you're ready to make customer relationship management a reality.

Robert McKim is CEO of MS Database Marketing, Los Angeles.

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