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Loyalty trends and best practices

2 Top Steps to More Profit from Your Best Customers

by Matt Ellinwood
October 25, 2012

Matt Ellinwood
Customer Segmentation Buckets

Tim Suther, the CMO of Acxiom, recently wrote in Ad Age about the keys to and benefits of customer centricity. This caught our eye, because loyalty programs must be customer centric in order to drive lifetime value and profitability. Mr. Suther calls out two critical steps that a marketing organization must follow in order to reap maximum benefit:

1. Reallocate your investment in customer relationships to those customers with the most potential for profit

In order to do this successfully, you need to know who your best customers are. If you don't have personas and the analytics in place to draw a specific picture for your business, take steps to make this happen.

2. Be disciplined with your acquisition strategies and avoid ever acquiring customers who do not have profit potential

Once again, achieving this takes a robust approach that includes the right analysis. Personas, customer data, testing and tracking are all essential components. In this day and age of data availability, however, marketers have more tools available to get there than ever before.

Neither of these steps are trivial to implement, but the benefit is clear. Mr. Suther says that successful implementation can increase margins by 10-15%--a huge boon. He also cites Acxiom research that concludes that most marketers invest less than 20% of their budgets in customer relationships, and dedicate even fewer staff to investing in high-value customers.

Perhaps most importantly, he highlights how critical it is for marketers to see these investments and results in the long term. Customer loyalty is a long-term investment, but it produces huge long-term gains. In order for a strategy and a program to be successful, marketers must take the long view and design a program strategy that invests intelligently and consistently in their best customers.

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