Source: NCR Counterpoint
Although statistics vary, one fact is clear: It costs at least six times more to acquire a new customer than it does to keep an existing customer. Fortunately, loyalty programs that link to a robust retail point of sale system are continuing to boost customer retention efforts. Banks, airlines, technology firms, manufacturers, and retailers use loyalty programs to not only attract new customers, but to retain the support of customers who have previously made a purchase with them. When it comes to retaining loyal customers, experts consider these programs a must.
Las Vegas Casino Shows Businesses The True Value Of A Customer
Unbeknownst to many, the programs that are designed to improve customer retention originated in Las Vegas. The genesis of the programs reach back to Las Vegas, and loyalty programs are in large part responsible for increasing customer satisfaction at many casinos. Just as a well-constructed home must have a properly laid foundation to build upon, loyalty programs require a retail management system as their base.
Facing growing competition on the Las Vegas strip, Harrah’s casino started taking customer satisfaction more seriously. To do this, the casino implemented a database marketing system, today referred to as a retail point of sale system. Harrah’s launched its well-known Total Gold customer appreciation program. Vouchers were given to loyal customers who were invited to attend special events sponsored by the casino.
Surprisingly, instead of tying rewards programs to past customer purchasing behavior, the program linked customer rewards to future purchasing behavior. This required Harrah’s to design a system that could predict a consumer’s buying habits weeks and months in advance. It’s this system that became one of the earliest retail POS solutions developed and used in the industry.
Before the loyalty program was officially rolled out to customers, it was tested. Free chips in varying amounts were given to customers in control and test groups. Final results lead to the discovery that low predictability among customers who return to the casino and make additional purchases, equaled low value. Instances where high predictability existed were deemed as having high value or high worth.
Which Loyalty Program Is Right For Your Customers?
Science used to enhance the retail management system led to upgrades, specifically the development of more advanced customer buying predictability tracking programs. Since Harrah’s launched its loyalty program, airlines, hospitality companies, financial services organizations, and entertainment firms have put similar customer appreciation or rewards programs in place. Over time, these and other businesses have also learned that some customer loyalty programs are a better fit for their organization than others.
Examples of customer loyalty programs are appreciation, rebate, coalition, partnership, and rewards programs. With appreciation programs, customers are given samples or a certain quantity of a company’s products or services. Products or services are distributed for free or at a discount. Of all loyalty programs, rebates are among the most popular in industries like automotive and technology.
Through partnership and coalition programs, customers can get discounts on tickets, products, and services by logging into databases or websites that link to partnering companies. Rewards programs, on the other hand, keep customer data in-house. Each type of customer loyalty program relies on a retail point of sale platform. If the programs function manually, they can get costly. Keeping associated costs down could require that retail POS solutions track customer purchases in real-time in addition to tracking product inventory.
Most importantly, customers have to see real value in loyalty programs. Specifically, getting the most out of the programs requires that business leaders listen to their customers, have the capability to track customer purchases in real-time, analyze customer purchasing preferences, and offer customers more than one loyalty program to participate in.
NCR Counterpoint offers automation for inventory and retail management system programs that enables your clients to leverage data, including data from loyalty programs.