My Marketing Strategy
Nicolette Lemmon, President & Founder
Seems that it may be time to review the definition of what customer or member loyalty really means to your organization. For example, many credit unions have created points or other loyalty programs to try and reward members for their long-standing business.
But does that work in today’s economy?
Are loyalty or rewards points meant to keep a member relationship active and spur word of mouth? An interesting article made me scrutinize the strategy. The Myth of Customer Loyalty, in Corporate Event Magazine, recommends profiling the profitable customers, not just assuming that being a part of a loyalty program is enough.
The author pushes the reader to think about the Customer Lifetime Value where the person is on the cusp of being capable of more profitability. There is a core of your membership that does represent the most profitable member households yet that core group is shifting and changing.
Using data mining, we can analyze what age range has the highest profitability. Or, reviewing new household data may indicate that the first 2-5 years of their membership is a highly profitable time and then their business tapers off.
It does make sense that loyalty programs should encourage deeper relationships, but it can also hide the fact that the people who may be highly profitable this year may have peaked in terms of their ability to bring the Credit Union more business.
There may be others waiting in the wings that just need a little more encouragement to build more business with your Credit Union.
What do you know about your most profitable members? Do you think programs like Reward Points are promoting loyalty, but missing profitability?