You Can’t Buy Customer Loyalty
If you’ve paid attention to popular culture during the last 40 years, you’ve come to learn there are certain things in life that money, apparently, can’t buy: love, happiness and all of those priceless things mentioned in the MasterCard commercials. But in the world of direct marketing, we have another to add to the list—customer loyalty.
The Customer Hierarchy
If you segment the customers in a cataloger’s database to fit into a typical customer hierarchy, you’ll see various levels of buying activity and inactivity that move a person from being a prospect to a “trier” to a buyer and so on until loyalty is achieved.
Customer loyalty can be a slippery concept, however, and is defined by the cataloger’s business and the goals and objectives of its management team.
MetalCraft, a business-to-business catalog selling durable asset identification products with a relatively long product life cycle, may have customers in its file who haven’t purchased in more than five years, but are still considered active and loyal with strong lifetime value.
But, if Quill Office Products had customers on its file who hadn’t responded in more than five years, they may be considered lost, and Quill either would be working hard to reactivate them or not mailing them at all. The same issue applies to consumer catalogs.
Is Loyalty Programmatic?
For years, catalogers of all types have spent time and money developing, building, executing and pulling out of loyalty programs that were designed to move a buyer up the hierarchy to loyalty. Some catalogers have made the concept work. They’ve defined a set of benefits customers will perceive as valuable enough to pay for during a time period long enough that positive contribution to lifetime value is greater than the cost to provide the benefits.
But building loyalty programs requires defining objectives, identifying the best mix of benefits, developing an exit strategy and investing capital. Those catalogers who’ve made the concept work have done so because the programs are relevant to the company’s brand and are part of what differentiates the catalog from its competitors.