Questions On Guest Loyalty
Questions On Guest Loyalty
Answer: Whatever they want - except my money!
If you want to be successful long term, you have got to have an ongoing conversation with your guests in order to understand:
1. who they are (segmentation) and
2. what they want from their relationship with you - period!
Loyal guests (read raving fans) will tell you that they are not looking for discounts. They are looking for things from their relationship with you that mean/bring more value to the relationship - not their wallet. Things like members only events, information, acknowledgment of their contribution to your relationship, first offerings, input into the process, to be a part of things going on, etc. This is about relationships, not money! If you continue to play in the price/money mud pit, you will never get out without some major pain.
Marty Neumeier wrote a book late last year called "Zag" (must read!) and in it, he uses the same six reasons why loyalty programs dont work, as I have used to denounce the use of discounts in general.
1) Most Loyalty programs are based on discounts, which train existing customers to expect lower prices and wait out normal pricing,
2) They attract loyal customers who would happily pay a premium,
3) They discourage new customers by making them feel punished or excluded,
4) They encourage competitors to retaliate with me-too programs,
5) They reduce profit margins, which
6) Reduces the companys ability to serve customers at formerly higher levels.
Three more of my own...
7) They dilute your Brand.
8) You become a commodity due to your use of the same discount strategy everyone else uses and this destroys your attempts to differentiate yourself.
9) They drive your guests to your competition because now guests are shopping your price to see whether or not they can beat it.
The truth is, loyalty cant be programmed.
Two more of the biggest factors why discounts are not a long term strategy that we have yet to cover are the lost opportunity cost, and loading up on the "low return" guest versus the "higher return" guest, in terms of their long term profit contribution to your operation.
Questions On Guest Loyalty - To learn more about this author, visit Jeffrey Summers's Website.
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Question: Since most loyalty programs involve some sort of comp (discount) what do you propose instead as the incentive?
Answer: Whatever they want - except my money!
If you want to be successful long term, you have got to have an ongoing conversation with your guests in order to understand:
1. who they are (segmentation) and
2. what they want from their relationship with you - period!
Loyal guests (read raving fans) will tell you that they are not looking for discounts. They are looking for things from their relationship with you that mean/bring more value to the relationship - not their wallet. Things like members only events, information, acknowledgment of their contribution to your relationship, first offerings, input into the process, to be a part of things going on, etc. This is about relationships, not money! If you continue to play in the price/money mud pit, you will never get out without some major pain.
Marty Neumeier wrote a book late last year called "Zag" (must read!) and in it, he uses the same six reasons why loyalty programs dont work, as I have used to denounce the use of discounts in general.
1) Most Loyalty programs are based on discounts, which train existing customers to expect lower prices and wait out normal pricing,
2) They attract loyal customers who would happily pay a premium,
3) They discourage new customers by making them feel punished or excluded,
4) They encourage competitors to retaliate with me-too programs,
5) They reduce profit margins, which
6) Reduces the companys ability to serve customers at formerly higher levels.
Three more of my own...
7) They dilute your Brand.
8) You become a commodity due to your use of the same discount strategy everyone else uses and this destroys your attempts to differentiate yourself.
9) They drive your guests to your competition because now guests are shopping your price to see whether or not they can beat it.
The truth is, loyalty cant be programmed.
Two more of the biggest factors why discounts are not a long term strategy that we have yet to cover are the lost opportunity cost, and loading up on the "low return" guest versus the "higher return" guest, in terms of their long term profit contribution to your operation.
Questions On Guest Loyalty - To learn more about this author, visit Jeffrey Summers's Website.
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John BrennanJohn Brennan Ed.D. Dr. Brennan is President of Interpersonal Development, LLC, a training and development firm. Interpersonal Development has provided sales training and coaching to more than 3,000 sales reps from over 100 companies. A native of Australia, Dr. Brennan received his doctorate from the University of Rochester. His dissertation researched the effectiveness of Behavioral Modeling Technology in training people in interpersonal skills. While he has spent most of his career designing or delivering training, he was also a Vice-President of Sales of a training and development franchise with operations in 25 markets. Dr. Brennan has designed and delivered sales training in North America, Asia, Europe, Australia and the Middle East. He has been a guest speaker at numerous national and regional professional conferences. When Microsoft wanted Best Practices articles on sales for their web site, they called Dr. Brennan. The results are at http://office.microsoft.com/en-us/FX011387391033.aspx His firms clients have included Volvo, The Prudential, Merrill Lynch, Eastman Kodak, Gannett, Equifax Europe, the Economist Group and countless small businesses. - Visit John Brennan's Website |
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