Impact of Advertising on Customer Loyality

*BEST PRACTICE: Customer *loyalty _The limited number of business contacts, the difficulty of recruiting new business customers and the cost of some business products or services all mean that maintaining customer loyalty is key to B2B marketing success. Sara Goodwins looks at some popular approaches to this problem_ Is it easier and less expensive to sell to existing customers than to find new ones? Of course it is. In the B2B arena, however, sales cycles are longer. If customers are not to be tempted away by competitors, marketing needs to encourage them to develop a relationship with the brand. Anthony Green, sales & marketing director of Concep, comments: â€Å"If businesses keep in touch, customers become familiar with products and services on offer and the company will be taken into consideration when a purchase is made. † When keeping in touch with customers, communication should achieve a number of objectives. Firstly, it should reassure the customer that they made a good choice of partner/supplier. It should also add value to the relationship, above what has been contracted, seek additional opportunities for further business, and inform business and client about new developments. Existing customers, lapsed customers and prospects should be approached differently. Marketers can assume that customers are familiar with the business and currently prefer your products/services or have done so in the recent past. Ideally no customer should ever go elsewhere, but there will be events such as changes in personnel, expiry of contracts, upheavals in the market, that change the relationship. Julie Cooper, co-director of events management company Fab, points out, â€Å"If a key contact within the client company is replaced, you have to establish confidence and trust with a new person – and the new contact may well bring with them pre-existing relationships with competing suppliers. † Keep in touch Lapsed customers, because of the past business relationship, should not be contacted in the same way as prospects. Alan Curnow, communications manager of Grass Roots, explains: â€Å"The distinction between clients and prospects is (more one of) tone than substance; we may need to refresh prospects' memories of who we are, whereas clients – even if they haven't bought from us for some time – know us. † Jan-Pieter Lips, head of business-to-business at Loyalty Management UK, which operates Nectar for Business, adds: â€Å"Experience shows that there is a direct correlation between winning back a lapsed customer and the time that has passed since the last transaction. Simon Ward, director of rewards scheme Seed, considers that the frequency of customer orders is like a pulse. â€Å"Businesses should monitor customertransactions and identify when they change. They can then contact thecustomer and find out why. † David Lebond, executive director of P&MM, agrees: â€Å"Doing something wrong is the best opportunity for getting a customer for life; if you handle a complaint well, put things right and demonstrate that you have the customers' interests at heart then not only will customers be retained, they'll also talk about you in glowing terms. Newsletters Newsletters and customers magazines are one of the most obvious communications methods, which can be used to maintain customerrelationships and loyalty. Richard Bush, managing director of Base One, says, â€Å"The trend for customermagazines – which we saw in the mid 90s – has diminished as many businesses found they were expensive and their success difficult to measure, although the need for what they provided still remains. † Electronic newsletters have taken over as less expensive, more measurable and interactive replacements. To include relevant material, you need to consider things like: life cycle of products/services and how they relate to customers and information held about customers which helps target mailings. Allow readers to choose – for example: offer the flexibility to pick areas of interest, frequency of mailing, etc. but make sure that they can change their selections with each mailing. Denise Cox, newsletter specialist at Newsweaver, says, â€Å"Stay away from complicated password-protected access to subscription profiles; this is a real turn-off and readers may just start deleting your emails instead of trying to change their preferences. Newsletters need a simple lay-out, clear navigation and no fancy graphics such as Flash that could cause them to be filtered. They require a table of contents on each page to provide clear choice and encourage further reading; around five main articles per newsletter of 300-700 words and a 100-word synopsis of each article on the front page with a link. â€Å"It is also extremely important that you have a strong call-to-action in your articles,† says Cox of Newsweaver. â€Å"It's astonishing how many companies don't. Yet it's your key opportunity to incite sales, feedback and make requests for more information. Readers typically decide within eight seconds whether to read on, set the information aside – which probably means they'll never read it – or delete it. The ‘from' and ‘subject' of the email need to tempt recipients to open it. ‘From' should be your brand, helping to build recognition; ‘subject' should be interesting and relevant. Content could include: articles stimulating thought and discussion, pertinent information relating to technological innovations, legislation affecting the industry, links to relevant news, client wins and case studies, industry reports and website links. Email newsletters are extremely cost-effective, popular, and immediate, and offer measurable conversion rates. Their main disadvantage is one of commitment. Companies must be prepared to publish a regular, well thought-out newsletter for it to be of marketing use and to respond to the interest it arouses. Reward/loyalty programmes â€Å"Reward programmes and loyalty programmes are not the same. The former is tactical, the latter strategic,† says Lebond of P&MM, he adds, â€Å"Reward programmes are a form of payment for repeat business; loyalty programmes represent a state of mind created in the customer. Reward programmes are most effective when there is rivalry in a sector (the programme then makes the point of difference); or there are frequent purchases to lock collectors into the scheme; or it's easy to change suppliers so customers need to be induced to stay. Reward programmes are effective anywhere where customer retention is key. Geraldine Tosh, managing director of IP oints, says, â€Å"A client running a website which relies heavily on advertisers, for example, can tempt people to the site using a reward programme. Extra points could be offered to clients making it their homepage for example, or using it frequently, etc. Branded reward programmes are often more cost-effective and less labour-intensive as well as enabling value to accumulate quickly. The main disadvantage is that companies usually have to commit for a period of time. Steve Cooper, marketing manager at Argos Business Solutions says, â€Å"In some cases a tailored scheme is more appropriate for a company where aligning with a different brand may conflict with or dilute the impact of their own brand and communications. † White label reward programmes aim to build value into a company's brand and offer companies more control of how uch value they're giving away. Tosh of IPoints says, â€Å"Reward catalogues can be tailored to include a business's own product or service at a reduced price. Companies could even tailor the earning and redemption around their customers' business needs. † Customers who know that your company is helping to build their business have a powerful incentive to buy from you. Rewards are short-term encouragements; loyalty is long-term commitment. As Lebond of P says, â€Å"If you get the right people with the constant attitude of ‘how can I make my customers even happier' then you don't need a reward programme. Corporate hospitality Customer events are undervalued largely because the value of them is difficult to assess. Face-to-face communications and shared experiences are very personal and the positive associations remain for a long time. Sarah Webster, director of communications at Eventia, explains, â€Å"Corporate hospitality enables suppliers to deepen their relationship with clients and to understand the motivations and constraints that influence buying decisions. † Corporate hospitality also adds value, as Rob Allen, chief executive at TRO, explains. Take the example of an accountancy firm which organises a breakfast briefing for its clients on the morning following the budget. By explaining the full implications of the Chancellor's new financial provisions, the firm is enabling its client companies to make significant savings or profits. The client relationship is enhanced. † Bush of Base One has no doubt, â€Å"Thirty minutes in a room with your top 10 customers is worth thousands of DM pieces. † Dedicated client website Webpages are particularly powerful marketing tools when used in conjunction with other marketing communication. Businesses can track the customer's journey through the site. Marketers can then use the information to tailor communications which recognise each client's interests. The main problem with websites is that the information they contain needs to be frequently refreshed to ensure that customers revisit. Many of the suggestions for newsletters apply equally to websites. Anthony Green, sales & marketing director of Concep, comments: â€Å"Additional information tied into a newsletter article can be put on the webpage. Those who click on the webpage have decided consciously that they want to access further information. Companies can then analyse the click-throughs and understand the specific areas of interest on both a macro and per-recipient level. † Tosh of IPoints is succinct, â€Å"Use microsites and reward schemes to collect information and then use the information in communications. † Communication is the key Relevant, valuable and timely communications are seminal to maintainingcustomer loyalty. Lebond of P says, â€Å"Every piece of communication could potentially be the lowest common denominator in a business's contact with its clients, so each one must be as good as possible. More business is lost by poor communications then by anything else. † Newsletters draw customers to websites where their interests can be analysed and responded to, reward programmes encourage frequent transactions, and hospitality enables personal contact. Curnow of Grass Roots explains, â€Å"Loyalty is not so much a pattern of behaviour as a state-of-mind. The single most conclusive evidence of loyalty is advocacy, not usage. The acid test is not how much the customer spends but how hard it would be to prise him away. And of course you cannot put a value on that