{"id":827,"date":"2015-09-03T12:20:05","date_gmt":"2015-09-03T10:20:05","guid":{"rendered":"https:\/\/merlinleonard.com\/en\/?p=827"},"modified":"2023-04-17T00:25:52","modified_gmt":"2023-04-16T22:25:52","slug":"customer-experience-loyalty","status":"publish","type":"post","link":"https:\/\/merlinleonard.com\/en\/customer-experience-loyalty\/","title":{"rendered":"Loyalty in the age of customer experience"},"content":{"rendered":"

Retention<\/strong>. You will often hear that it costs less than acquisition<\/strong>. “It’s always easier to sell a chocolate bar to someone who already buys 20 kilos a year than to someone who doesn’t buy any. Let’s say that it will allow you to generate more revenue<\/strong>.<\/p>\n

The life cycle of your customers<\/strong> has a beginning and an end, just like in any book. The idea is to engage and prevent customer inactivity.
\nA loyalty program is a good way to play on these two levers. And let’s not forget that the life cycle is shorter now with the web. Your customer is constantly solicited by your competitors.<\/p>\n

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\"The<\/p>\n

The customer life cycle \u2013 source : definitons-marketing.com<\/p>\n<\/div>\n

Loyalty programs: business model.<\/h2>\n

The loyalty program comes into play after the first purchase. It serves to engage the customer with the objective that he will renew his purchases<\/strong> with your company (and not another one).
\nAfter-sales service<\/strong> is a part of a loyalty program, just like relationship marketing programs.
\nTraditionally, most loyalty programs are based on a transactional model<\/strong>: you offer points<\/strong> that have a monetary value<\/strong>. This is a model that all loyalty programs use today.<\/p>\n

The principle? You spend, you earn points and most of the time you will use these points or promotional offers to reduce your bill on a next purchase.
\nAs each retailer now has its own loyalty program, it is quite difficult to differentiate yourself with this one tool.<\/p>\n

Classical segmentation models<\/h2>\n

The Life Time Value<\/h3>\n

Let’s try to broaden our vision and go beyond this transactional model.
\nA first approach is to use the “life time value<\/strong>” which tries to position each customer on two axes: the immediate profit generated by this customer and its long-term potential.<\/p>\n

This allows us to differentiate them into four categories: those we want to maximize, get out, keep and the preferred ones.<\/p>\n

\n

\"Life<\/p>\n

The Life-Time Value model. Source : Shaw & Stone (1988), Database Marketing.<\/p>\n<\/div>\n

Each quadrant in the matrix indicates the action to be taken with respect to the customer to improve profitability.<\/p>\n