The end goal of any customer loyalty program is to find a customer who loves your brand enough they repeatedly buy from you and share your business with others via word of mouth.
However, this might seem like a dark maze to you. One that isn’t clear where to go. That’s why the loyalty ladder helps you climb above the maze to see where you need to take your customer.
What is the Loyalty Ladder?
The Loyalty Ladder is a framework created to define the level of loyalty a customer has with your business. It provides a path you can follow to increase customer loyalty.
Let me explain further.
Levels of the Loyalty Ladder
There are 5 levels to the loyalty ladder. Download a step by step check list for each stage of the loyalty ladder.
Starting at the Suspect stage this is when someone discovers your business. If they’re interested in what you do as a business then they become a prospect, which means they’re in your target market as a possible customer.
Moving up the next step from the prospect is when they become a customer. A customer is defined as someone who has purchased a product or service from you for the first time.
In order to make them someone who comes back to make repeat purchases (a client) the customer phase of the ladder needs to go well. This step is all in the hands of your staff.
When a customer becomes a client and repeatedly returns to your business it means you’re doing something that they like. If you can learn what this is and how to do more of it then you can plan how to move them up to the last stage – the advocate.
Creating an advocate is the great goal of a loyalty program because this person not only buys from you again and again but they also tell others about your business.
Their enthusiasm when speaking to their friends and family will encourage others to try your business.
How to turn your Prospects into Advocates
At what point are you able to identify a prospect who will become an advocate and how do you successfully take them through the path?
Well, In his article “The Loyalty Ladder: A Sideways Look” Sridhar Mutyala states that
“…we often commit on the first visit. This first commitment is instinctive and emotional. It springs from our basic sense and appreciation of something done right. Customers don’t scrutinize the relationship every step of the way. They take leaps. What they’re doing in subsequent visits is continuing to explore and revisit an original experience they’ve already committed to, not finding reasons to commit at a later date. ” The Loyalty Ladder: A Sideways Look, Sridhar Mutyala
The core sentence that sums up Mutyala’s point is this: “This first commitment is instinctive and emotional.”
If this is correct then where does the loyalty ladder fit into this model?
How do you build a retail business that attracts prospects who are more likely to be loyal?
Well, you need to control everything within your own four walls and ensure that each new prospect who enters your business has a great customer experience.
“Once a shopper enters your store, they’re in the perfect setting to enjoy everything that sets you apart from competitors – both online and off. Your salespeople must be the differentiators between button clicks on an app and a true shopping experience. With the right tools and techniques, they can create an exceptional experience and build a loyal base of fans along the way.” – How To Build Retail Customer Loyalty, The Retail Doc
The role of the loyalty program and software
Once you’ve engaged a prospect with that first great experience you then need a way to keep in contact. This is where a loyalty program backed up by solid loyalty software helps build the relationship you have started with a customer.
Loyalty software records every purchase made by your customer and so gives you an insight into their preferences which you can use to personalise their shopping experience.
Let’s put this into an example.
Imagine, you run a chain of Italian restaurants and you’ve developed a new recipe for a herb filled pizza dough.
Here’s one of your shops:
Rather than add it to the menu and ‘hope for the best’ why not take advantage of the customer loyalty information you’ve been collecting?
Log into the software and run a report for every customer who has visited one of your restaurants more than 4 times in the past 3 months and ordered a pizza every time. You can then invite those customers to an exclusive invite only event at your flagship store.
On the night of the event your restaurant is filled with your loyal customers who are having a great time chatting, buying drinks and waiting for the event to start.
At 7:30pm the event starts and your head chef introduces the new recipe by demonstrating the pizza being made as she talks through the difference between your normal base and this new one.
After the demonstration the customers get the opportunity to eat their favourite pizza made with this new base.
By creating a personalised perk such as the exclusive event you’ll move the customer up the loyalty ladder from a client (someone who repeatedly buys from you) into an advocate (someone who promotes your business on your behalf). On top of that you can also request feed back as to what they do and don’t like about the new recipe which you could use as testimonials on your website or to tweak the recipe if needed.
The Bottom Line?
You can encourage repeat business through delivering a great customer experience backed up by powerful software.
“The technology helps the relationship, it doesn’t create it.” (Rewarding Customer Loyalty Program Without Sacrificing Retail Profit, The Retail Doc)
“The customers who love you fall in love with you on the first visit. They’re at the core of every new pool of customers… The best way to build loyalty down the road, then, is to focus on loyalty and commitment on the first visit… Make the first visit special and everything else (loyalty, advocacy, lifetime value) will likely follow.” (The Loyalty Ladder: A Sideways Look, Sridhar Mutyala)
So invest in training your staff how to engage customers and create a great shopping experience. Then use the insights gained from the loyalty software to provide a personalised service.