Why Invest in an Incentive Program when Times are Tough? (cont.)

3. Nurture and leverage your customer relationships
A fundamental purpose of customer loyalty programs is to build and maintain strong relationships with high-value customers. This objective could not be more crucial than during a slowdown in business. Customer loss is a double-whammy during a downturn: you are losing established revenue at a time when you aren't comfortable allocating marketing resources to help acquire new customers.

Your efforts to improve retention should include ramping up relationship-focused communications, initiatives to strengthen customer loyalty and cost-effective ways to increase the value you offer to customers. You'll find that the cost of doing so is far less than what you'll spend replacing lost business. Here are some suggestions for aligning your incentive program with overall efforts to boost customer value:

• Maintain current program incentive value. As indicated previously, when making budget cuts, fight to keep the level of incentive awards being offered to your customers and partners intact. Generally, program award costs (those incentives associated with purchases) will fall during a slowdown without having to reduce the value of the program to customers - and reducing purchase incentives will simply compound the loss of sales.
  
  
• Offer product training or other classes. We advocate this tactic no matter the economic condition. We've watched time and again as clients rack up significant returns on the energy and resources invested in developing training programs that increase the product knowledge of their customers and partners. One client, a manufacturer using an incentive program to motivate dealer sales reps to sell its products, found that sales reps who participated in product knowledge and demonstration training increased their qualified sales by as much as 75%.

The explanation behind such strong results is simple – the old business adage that “salespeople sell what they know” comes to mind. And honestly, everyone appreciates being supported in ways that help them perform better, especially when facing challenges. The customer loyalty born of goodwill efforts like these can most certainly influence purchase and selling decisions.

While it takes time and resources to create educational content, training can be delivered to customers in cost effective and compelling ways. To minimize administration for the manufacturing client noted above, we’ve created a set of selfhelp tools that customers can access via the incentive program Web site – they include online product study guides, formats for effective product demonstrations, and quizzes testing product knowledge. To stimulate uptake of the training, dealer sales reps earn points for successfully completing quizzes and conducting demos using best practices. Program communications promote the new “point earning” opportunities to maximize awareness of the training.

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