What is Loyalty?
Customer Acquisition
The link between customer acquisition and customer loyalty is sometimes not well understood, in the extreme there may not even be one! It is also true to say that for some businesses the acquisition guarantees lifetime loyalty. Both these extremes are rare but it serves to point out that some businesses rely more heavily on loyalty initiatives and programmes than others where the business case can often come down to a philosophical debate about marketing investment.
So it is reasonable to assume that customer acquisition strategies should encompass a consideration of customer loyalty.
Often the business case for the development and launch of a loyalty programme, which typically incurs significant up-front investment costs, is justified, in part, by a healthy uplift in customer acquisition.
It can therefore follow that what seemed like a good idea for customer loyalty focuses too heavily on customer recruitment leading to tempting introductory ‘loyalty’ offers that are easily attainable and that promote and deliver the desired customer behaviour in the short term but fail to deliver long term loyalty. This is often exacerbated by individual business units being responsible for acquisition and retention plans who launch ‘quick fix’ campaigns that are at odds with a well thought through strategy and that have the effect of training customers to become ‘promotions junkies’ and as such less loyal than ever before.
All customers are not equal. It needs to be understood and accepted that not all customers have the potential to be loyal, it is therefore important to recruit the right customers for the right proposition and equally important to identify the required return on investment (ROI), from a customer over an acceptable timeframe that will justify the initial investment in the recruitment initiative.
We at LCUK always consider the type of customers you want to acquire and plan for their continued custom beyond the honeymoon period – like a marriage, customer relationships need to be worked on. How customers are recruited can have a material impact on whether they will exhibit the loyal behaviours you seek. We help our clients to target their acquisition activity toward customers with the greatest loyalty potential, and with incentives that can be justified through a positive ROI within a realistic timeframe.
