What Product Managers Need To Know About Customer Loyalty

by drjim on November 1, 2010

Customer Loyalty Is What Makes A Product Successful

Customer Loyalty Is What Makes A Product Successful

Imagine for a moment that you were inthe business of building walls. Every day you’d get up go build part of a wall and then go home. What if every day when you returned, all of the work that you had done the previous day had been undone? How would you ever get that wall built?

Product managers who create products that don’t generate customer loyalty find themselves in a situation where every day is like their first day: they have to go out and win every customer for the first time.This is crazy. What you need to do is to find out how to generate loyalty in your customers so that they sell themselves next time it comes to buying your product…

Loyalty Is All About Your Program

The key to a good loyalty program is to havemany different layers. Product managers know that customers who have bought from you and are now part of your product’s loyalty program will want to move up to the next level if you do this correctly.

In my experience, a product loyalty programneeds to have two parts to it: one part that rewards your customers based on how much they’ve bought from you and another that rewards them for how long they’ve been your customer.

I like to trackhow much a customer spendsover a 12-month period in order to determine which level of my product’s loyalty program they belong in. At the same time, I like to have another loyalty program running that customers can only get included in after they’ve purchased from me over the past 5 years.

Loyalty Is About Being Remembered

Sowhat should your customers getfor being part of your product’s loyalty program? Well, that can be very dependent on just exactly what kind of product you are selling. However, there are some basic rules that ever product manager needs to follow.

Every member of your product’s loyalty program needs to getan annual letterfrom you, the product manager. You need to thank them for being a customer and let them know what changes are coming up for your product.

During the course of a year, you need to reach out to your loyalty program membersat least four times. Depending on what your product is, you need to find ways to provide your loyalty program members with things that they will value. Informational reports, refrigerator magnets, etc.

Don’t forget the holidays. I personally believe that sending out Christmas cards is a waste of time and money – everyone else does that. I much prefer (for U.S. based customers) to send out Thanksgiving cards. They are unexpected and will actually be read by your customers.

Loyalty Is Not Slick, It’s Personal

Contacting your product’s loyalty program members is important, but what is even more important is HOW you contact them. This is the area where I’ve seen the most product managers fall down.

All too often we can get caught up in how something that our customers are going to see looks. We want it to be a slick and catchy as possible. This is where we start to cause problems.

It has been my experience that communicating with your loyalty program members using plain and relatively simple methods (postal mail, email, web sites) seems to work the best.

What you’ve got to remember here is that you are working on cultivating a relationship with your repeat buying customers. You’re not trying to sell them on your product again, rather you are trying to make them feel like they are a part of your family.

What All Of This Means For You

Product managers who don’t set up a customer loyalty program for their products are crazy. You want to make your existing customers feel special and have them take the initiative to maintain the relationship with your product.

There are many ways to set up and run a product loyalty program. Keep in mind that the quality of the program will be determine by the number of membership levels that it has, what you provide your members with, and how you contact them.

Instead of having to keep re-selling your existing customers over and over again, a loyalty program allows you to make them part of your family. Think back to your childhood: isn’t it always easier to sell to family members?

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: How many levels do you think that a product loyalty program should have?

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What We’ll Be Talking About Next Time

Product managers are responsible for making a lot of decisions about our products while they are being developed; however,one of the most important decisionshas to be if we are going to team with another company to develop a product. It’s the classic “Batman” (he’s got a sidekick names Robin) vs “The Lone Ranger” type of decision. Which way should you go?

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