Set the target audience

The second element to consider in the implementation of loyalty programs is to determine the target audience of the strategy. A great advantage of customer loyalty programs over other traditional marketing tools is their ability to differentiate consumers. Therefore, it is necessary to decide whether all the clients or only those that fulfill certain conditions can be part of the program, either by their characteristics or by the degree of implication.

The characteristics of the loyalty program and the generic goal of generating new customers make it appropriate in principle to offer the application to any customer who has an interest in joining the loyalty program.

In any case, it is important to note that the information provided by this loyalty program allows customers to be classified according to different characteristics, such as their frequency of purchase, their average ticket, etc. This can greatly facilitate the knowledge of its customers and their classification as proposed in the attached chart “the pyramid of fidelity”. While the pyramid represents how the number of customers in the trade could be distributed in general, it is also necessary to take into account the billing associated with the different types of customers.

According with Pareto´s Law, at least 60% of the billing corresponds to the so-called “regular customers”, which correspond to the exclusive and regular clients of the pyramid. This reflects that, knowing who these customers are, it is possible to focus efforts on different segments in a diverse and effective way. Thus, it is important to convey that, depending on the degree of fidelity to the establishment, different actions can be carried out with different objectives.

It is necessary to distinguish between actions aimed at capturing and those directed towards customer loyalty. Do not neglect any of them and expect that their implementation will depend on the resources of the company. An ideal situation would pose the power to perform multiple actions differentiated to each segment. The actions of attracting new customers focus on getting them to make a first test with the products or services of the company. For example a small discount may be effective to achieve this goal. Sporadic and casual customers would be at this level. Usually represent a high percentage of total customers.

In contrast, retention-oriented actions focus on generating repeat and constant business with the same customers. That is to say, it would try to get customers to move up the loyalty pyramid, to get the maximum possible of exclusive customers. Actions such as birthday and Christmas congratulations, make the customer feel important to the trade and do not represent a significant cost. Therefore, discounts, details and gifts should be allocated based on the degree of fidelity.

The following is an example of applying a differentiated customer strategy based on its loyalty: