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Practical EcommErcE
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 Juy/augus 2007
online merchants want t fnd ways t increase revenues
by ncoraging cstomrs to mak rpat prcass. using an onin oyaty programwi crtainy p, bt it mst b on carfy an wit t rigt toos.Tr ar many factors invov in crating a sccssf oyaty program. howvr, bforyo consir initiating a oyaty program of yor own, start by focsing on ivring t bstxprinc yo can to yor cstomrs. Grat xprincs, ik oyaty programs, wi sprbsinss from rpat cstomrs.
Onine loyatyPogams canInease repeatShoppes
TOOlS ARe AVAIlABle TO helP IMPleMeNT A CAMPAIGNBY dAVe YOuNG
Dave Young is the marketing and public relations specialist for FastServers.Net, lead technical writer for cPanel and a freelance writer. He can be reached through Youngcopy.com.
 
 July/august 2007
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www.prcticlecommerce.com
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Tr actors you can impmnt rigtaway to prompt your customrs to rturn orsubsqunt purcass:
 
Site usability.
 
Quick fulfillment.
 
Good customer service.
Wn your sit’s navigation an usabiitymak it asy to fn proucts an ncssaryinormation, ty wi want to rturn againan again. Put simpy, t sopping xpri-nc must b njoyab.“Tr is a irct corration btwnsipping ays to t customr an rpat pur-cass — t ongr it taks or a customrto gt t purcas, t ss iky ty arto mak a rpat purcas,” sai Jim Novo,autor o “driing down: Turning Customrdata Into Profts Wit A Sprast.”Pric is not t primary rivr o oyaty.To gnrat oyaty, you av to go byonpric an or customrs an xprinc, anconsir ways to improv t xprinc yourcustomrs rciv wn ty purcas yourproucts. “Tink about your customrs anwat ty wou s as a ‘bttr xprinc’an tn fn ways to ivr it,” Novo sai.Somtims t natur o a prouct or xpri-nc can b conusing, an t xprincissu is not somting tat is obvious or watcustomrs ar compaining about. Tus, yousou us your atabas to anayz t atato fn spcifc aras tat can b arss.
Gift cards and other tools
Git cars, rqunt purcas programs anpoints programs ar xamps o oyaty pro-grams. Ts typs o oyaty programs mayor cas back, iscounts an vn r itms.or xamp, i a rguar customr purcass fvitms rom your prouct ist, a rqunt purcasprogram wou giv tm a sixt prouct r.“Wtr you or cas back, rwarsik git cars an mrcanis, opportuni-tis, accss, onations or t ik, t ky isintiying wat wou b vau by yourcustomrs tat wi utimaty motivattm to bav in a crtain way,” sai Bramhctkop, irctor o markting tcno-ogy at Kobi Markting.hctkop suggsts t oowing wntrmining t appropriat oyaty programor your businss:
 
A robust data analytics strategy that allows you to profile, identify and differentiate.
 
A solid technology platform that supportsthe program with a points engine to keep upwith loyalty rewards, a campaign manage-ment system that can provide a compre-hensive approach and a data warehouse tohouse a shopper’s historical activities.
 
Having a clear and consistent communica-tions plan.
“Companis sou or customrs aprogram tat rwars tm or a tir pur-cass,” sai Grg Grunston, irctor o irctmarkting at 1-800-lOWeRS.COM. higypromoting t program trougout t ntirsopping xprinc is aso rcommn.Grunston bivs oyaty programs moti-vat consumrs to spn mor an spn morrqunty. “On avrag, customrs nro ina oyaty program ar twic as iky to mak apurcas at tat rtair tan a customr tatis not nro.”
Implementing a program
Tr ar many ways to impmnt anmanag a succssu oyaty program. In orror a oyaty program to aciv a ig rturnon invstmnt, a mrcant must anayz txisting ata an bavior o tir customrbas. I mrcants o not  comortabanayzing tir own ata, tr ar srvicprovirs tat spciaiz in ping mr-cants bui, customiz an poy oyatyprograms spcifc to tir businss mo,
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Practical EcommErcE
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 Juy/augus 2007
products and customers.or tose mercants wo wantto buid and impement a oyatyprogram on teir own, many sop-ping cart systems oer add-ons tokeep track o points or coupons sentto customers. One sopping cartsotware product, MIVA Mercant,oers te Membersip SuperMod.Te modue is designed or smaerretaiers witout te abiity toactivey manage a program.Many service providers manageautomated onine oyaty programsby inserting tags in your site’s pageor providing a “oyaty website”tat is branded to your business.Tey coect a te data or you andmanage te program. One drawbackto tis metod is te abiity to cus-tomize te program to your audience.Incentive logic is one provider tatcan uy impement and manage anonine oyaty program.Te most expensive, and te mostproftabe, route to take wen impe-menting a oyaty program is to buida customized program to your specifcbusiness mode. however, “you needat east 20,000 active customers toget into an area were a customizedoyaty program coud pay o becausetere are fxed costs or design andimpementation,” Novo said.Since buiding oyaty is a ong-terminitiative, fnding a marketing agencyspecifc to a oyaty program is criti-ca. “We beieve tere is tremendousvaue in working wit a singe agencywit specifc expertise in buiding and
Whn dmining hw muh  invs in  ll pgm, n il shuld fislul wh  usm is wh  his/h businss.Ging  usm  puhs  singl pdu isn’ h gl f ms mmsi wns. Hwv, ms wns fil  lul h pnil lifim vlu f usm whn dmining hw muh  invs in  ll mpign. S wh is i wh h bm lin   nd kp  quli usm?th  sm mplid ws  lul h lifim vlu f  usm.Hwv,  simpl mhd is  mulipl h vg sl  u si b h numb fims n vg usm ds. F insn, if h vg shpping  siz m spbking suppl s is $40 nd h vg usm pls n d sixims p , h “vlu” f h usm is $240 p  nd $1,200 v fiv s. Ifu un  20 pn mgin f pfi wih u businss, wuld u invs  ’s pfif $48  pu nd in n usm h wuld s f  lifim?a ll pgm hings n h pmis h i is hp  kp  usm hn   nw n. on u hv  usm, building  linship wih hmis iil. I’s hugh h linship h  bnd is d bwn nsumnd il. I’s lws g  gn nw usms, bu i’s usull muh lssxpnsiv  hld n xising usms.“yu n s b h ul f humb h i’s svn ims lss xpnsiv  minin usm hn  find  nw n,” sid Gil Gdmn, ceo f cnsn cn, pmissin-bsd mil mking sluin usd b m hn 100,000 smll businsssnd ssiins. “rp businss is lws m pfibl. yu n div psls nd usm fls   dmill lw s hn u n gn nw
cAlculATInG A cuSTOMer’S lIFeTIMe VAlue
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