Sunday, October 10, 2010

eCommerce Rule #9: Identify your best customers, encourage customer loyalty, and motivate the evangelicals

The rise of social-media services like Facebook and Twitter, and the explosion of niche blogs, means your customers now have very public microphones with which they can broadcast their feelings about you. This cuts both ways: Your disgruntled customers have a louder way to complain. But social media also means that your biggest fans (as discussed in Rule #2 and Rule #5) can be heard more, too. They can use social media to sing your praises all over the Internet.

Make sure you take advantage of this phenomenon. The first step is, identify your best customers. They are your most profitable customers, who come back to your site again and again. Work hard to keep them happy. You might try dubbing your most loyal customers VIPs, as Zappos does. This nomenclature may sound silly, but people are naturally proud of being loyal customers of services they like. Then make these customers realize you value them as evangelists or VIPs. Invite them to VIP-only events or sales, and send them special emails to get their feedback. This also serves to encourage their customer loyalty. But you can do more.

Consider Amazon Prime. With Amazon Prime, consumers must pay a fee to participate. But once customers sign up, they get free shipping on all their orders, not just those over a certain amount. This program is incredibly effective at turning repeat customers into truly loyal customers. The logic is that once you’re a paying member of a retail site like Amazon, you’ll always consider Amazon first when you want to buy a new book, or a movie or a backpack. You’ve got to get your money’s worth, after all, since you paid an initiation fee to get into Amazon Prime. Amazon’s goal with this program is for its site to become a daily habit for its customers. This is an incredibly expensive program to implement if you're not already at scale, and a huge barrier to entry Amazon has erected (though some retailers are now locking arms to try to offer a similar program and compete with Amazon).  Mobile apps are another way of encouraging customer loyalty. If you are able to get a customer to download your mobile app, you make it that much easier for your customers to find you again and use you when the urge strikes.

If you're at scale, yet another gambit is to create a loyalty-points system, as MooseJaw, an online retailer of outdoor gear, has done. This site’s program—akin to frequent-flier miles—gives customers ten points for every dollar they spend on regularly priced items, and five points for every dollar spent on discounted products. Customers can then use their accumulated points to buy products on MooseJaw’s reward site.

Now, motivate your evangelicals to sing your praises. In Rule #3, we discussed the importance of Net Promoter Score. To best leverage your NPS, make it as easy as possible for your Promoters (those that rated your service a 9 or a 10) to promote you. One way is through loyalty or incentive programs. These might be simple offers, like “refer a friend” to save money on a future purchase. But there are a number of new vendors that offer unique solutions to motivate users to share their purchases. The space is still very young, but it will evolve quickly. The higher your NPS, the better you’ll be positioned to leverage it.

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