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Lifetime and Incremental Customer Value Pushed by Retailers
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Oct 13, 2008 by Mark Maier
I think we all know that it is much cheaper to gain future business from existing customers as compared to developing new customers, although new customer funnels need to be part of the marketing mix, ignoring your existing customer is a mistake too often made in the business world. The Aberdeen Group recently posted results from a 2008 study of retail customers espousing the benefits of Lifetime Customer Value and Incremental Customer Value...both of which are an important factor of the EFS Generator and complete the picture in the Buyers Awareness Cycle."In times of stagnant growth, retailers need to develop lifetime customer value through improved customer retention, re-activation, and acquisition strategies," said Sahir Anand, senior analyst at Aberdeen and chief author of the customer loyalty benchmark report.
Among retailers, 93% say they execute loyalty programs as a standard offering for their web, store or catalog channel customers. Such campaigns may include point perks, rewards, coalition marketing, frequent buyer offers, and private-label credit cards.
Cost-benefit issues surrounding loyalty programs are top-of-mind for retail marketers, and measurement of ROI on customer loyalty programs is continuous, the study found. Determining such an ROI is a much simpler process than other retail solutions, such as POS, merchandising or pricing, Aberdeen said.
Repeat visit (61%), incremental sales (58%), and overall satisfaction (57%) have emerged as the three most significant factors used by retailers for justifying spend on loyalty elements, operational costs, and upgrade/deployment of loyalty software applications."
Do your clients monitor repeat visits, incremental sales and satisfaction? Do they have existing software that they could use to establish a program? The best example I have seen of this was a Floral Shop that asked permission to get milestone dates in your life (Birthdays, Anniversaries, etc.) for their database. They have developed partnerships with restaurants, theme hotels, amusement parks, theatres, day spa's, shoe & clothing stores, and limo services to offer packages to me when each of these milestone dates come up and they always include floral as a base item. They put together the whole package that includes flowers, dinner, a shopping spree or a day at the spa because they have the database and e-mail me reminders of important dates with choices in all price ranges. This isn't on a expensive piece of software, they keep track of it on Microsoft Access and have made my lifetime customer value and incremental sales worth more to them because they have made it easy for me to shop.
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