How to Develop Customer Loyalty During the Recession

How to develop customer loyalty during the recession

Given the economic climate, it will be far more resourceful to market to your existing customers than it will be to acquire new ones. Research has shown that it can be as much as five to six times more expensive to sell to new customers than it is to existing ones. Sales promotions are designed to enhance the value perceived by the customer for particular goods or services and provide a valuable way of rewarding customers. There are a number of factors which need to be considered when executing a sales promotion, well timed and well designed sales promotions can drive sales, draw in new customers and increase profits, badly implemented sales promotions can devalue the perception of a service and have a detrimental effect on the long-term profits of a business.

v Good vs. Bad Campaigning

Sales promotions may succeed in getting customers through the door but research has demonstrated that they often fail to secure long-term repeat purchases. This is why timing is such an essential factor for the success of a promotional campaign. For example, temporary price reduction could be effectively used to promote a new treatment as it reduces the level of risk the customer associates with trying something new out. However, if promotions are used too frequently they may reduce the customer’s reference price, meaning they will be reluctant to pay full price for a particular product or service.

v Appealing to hedonic values

Beauty treatments are associated with feeling good, promotions which focus on enhancing the experience further could provide a more effective means of increasing customer traffic. Such a promotion needs to share the values of the product or service, for example, an invite-only late salon opening where customers get free glasses of wine and chocolates, in addition to discount, may be more successful than a discount alone. It is worth noting that research has shown that customers don’t regard discounts of less that 15% highly, indicating that promotions need to be above this threshold to have the desired effect. Similarly, research has also shown that advertising discounts as percentages is has proved to be more effective than using proportions, such as “half price”. Finally, customers are naturally sceptical of promotions so a more effective way of framing a discount may be “to say thanks for your support over the past year” or something of that nature.

v Effective targeting

Sales promotions have been shown to be more effective when they are targeted and personalised, rather than just sending a single generic message. SMS can be a relatively cheap way to reach customers directly, and provide a good way of maintaining communications with customers. Building up a relationship with clients is a key driver of success in the service industry, and a campaign such as promotional birthday offer may be a fantastic way of rewarding customers as well as encouraging loyalty.

v Measure Measure Measure

It is crucial to measure your return on investment and this will aid you when developing subsequent promotions. Comparing your results with previous financial records will give you the best indication of if you are gaining prosperity, breaking even or heading for a loss and, ultimately, will indicate whether or not the promotion was worthwhile.

Studio Tracker is a salon management software package which allows you to store, track and communicate with customers in one easy-to-use integrated system. Campaign templates are built into the system, which allow you to send out personalised messages, such as promotional offers, to customers via SMS. It can show you the purchase history of your clients allowing you target promotional material more effectively, as well as making cross and up selling easier. Studio Tracker monitors stock levels, enabling you to monitor sales and re-stock your bestselling products more quickly thus preventing lost sales.

I have a Bsc in Psychology (Hons) from the University of Sheffield and an MA in Advertising and Marketing from Leeds University Business School. I am now working as a marketing associate for a small business to business software firm who specialise in CRM software solutions.