BDC outlines 6 steps for creating a customer loyalty program

The Business Development Bank of Canada (BDC) has released a guide detailing six steps for businesses to create a customer loyalty program. This initiative is designed to enhance sales and marketing effectiveness while lowering the costs associated with acquiring new customers.

BDC emphasizes that retaining existing customers can be up to five times less expensive than acquiring new ones. Furthermore, current customers are generally more receptive to purchasing more or making repeat purchases. Typically, 20% of customers account for 80% of a company's revenue.

Before launching, businesses are advised to assess current customer satisfaction levels and identify key personnel for program participation. It is also crucial to pinpoint customers who purchase frequently but have the potential for increased profitability. The program is generally not recommended for businesses with a long sales cycle exceeding three years.

Setting clear objectives and measuring them using CRM software is essential, with potential goals including a 10% increase in purchase frequency. Companies should also budget for both loyalty program management and new customer acquisition. Customers should be segmented based on criteria such as purchase volume, additional purchasing capacity, payment history, and overall profitability.

BDC's publication offers a practical framework for fostering customer loyalty, which can lead to substantial revenue growth for small businesses.