Technology Focus Part 2 Build Online Loyalty Efficiently

Best practices to increase loyalty and retention on your Web site

Do you need a formal loyalty program to boost customer retention and customer loyalty? Don't assume so just because your competition has one.

Recent research indicates that some focused Web site improvements and carefully constructed e-mail campaigns can have a very positive impact on loyalty just by improving the overall online experience. Here are some best practices that can make your online offering more relevant to customers' interests and needs, building retention and loyalty while avoiding the costs of developing and running a formal loyalty program.

1. Launch a loyalty program. Loyalty programs offer formalized incentives for customers to buy repeatedly. Depending on your business environment, a carefully designed loyalty program may be appropriate. Some customers will respond well to your program, but many won't. Forrester Research found that only 24 percent of online consumers feel more connected to marketers because of loyalty programs, and that just 34 percent of online consumers say they buy more because of loyalty programs.

It's no secret that online customers tend to be disloyal because the Web makes it so easy to find a lower price elsewhere. So if a loyalty program does no more than peddle discounts (as most of them do), it'll primarily appeal to price-motivated buyers. Its overall impact may simply be to deflate your prices and reduce your revenue.

2. Build loyalty into your site. The key to encouraging profitable loyalty is to build loyalty enhancing features right into your site. This helps you build an emotional connection with your customers. If you can provide a compelling reason for them to buy from you — other than price — you have a significant advantage over the competition.

3. Reach out with e-mail. Ask them to come back. Targeted e-mail is a good way to keep customers in the fold, particularly if your message speaks on a number of levels. Focus on providing relevant offers, messaging and content that give your customers a compelling reason to come back.