Customer Loyalty Marketing & Retention Glossary
Acquisition - The events or activities undertaken to obtain new customers. Acquisition may be done periodically through specific marketing campaigns or on an ongoing basis. The types or quality of new customers can have a significant and lasting effect on key performance indicators and future customer loyalty to the brand.
Activation Rate - Most typically used in the credit card industry to indicate the percentage of customers receiving a new credit card who actually activate the card.
CRM (Customer Relationship Management) - Refers to the methodologies, strategies, software, and Web-based capabilities that help an enterprise to organize and manage customer relationships. Companies utilize this approach to gain a better understanding of their customers’ wants and needs.
Cross-selling - The strategy of promoting additional products to current customers, often based on their past purchases. Cross-selling is designed to achieve incremental sales by deepening the customer's relationship with the company and decreasing the likelihood of the customer switching to a competitor.
Customer Churn - A term typically used in industries providing an ongoing service to customers (for example, wireless communications, credit card issuers, cable companies) to refer to the periodic loss of customers. Businesses with high churn must continually acquire new customers in order to maintain their customer base. Customer loyalty marketing and retention programs are an effective means for reducing customer churn.
Customer Segmentation - A marketing technique used to divide a customer base into segments based on meaningful characteristics. Customer segments may incorporate registration information, household demographics, purchase behavior, and various other attributes which define a dynamic group of customers or accounts. Customer segments serve as targets for advertising, promotions, and communications.
Fulfillment - Within the loyalty marketing industry, this refers to the processes associated with distributing requested rewards to customers (gift cards, merchandise, travel, experiences).
Incentive Program - A program with items of perceived value added to an offer or sales goal to encourage specific response. Can be targeted at consumers, but more typically refers to employee or sales force or channel programs.
IVR/VRU - Interactive Voice Response or Voice Response Unit. A technology that enables automated interaction with telephone callers. Enterprises use IVR systems to reduce the cost of common sales, service, collections, inquiry and support calls to and from their company.
Loyalty Marketing - A multi-faceted marketing discipline intended to improve financial performance by increasing the lifetime value of a company’s customer base over the long term.
Multi-channel implementation - Refers to marketing programs that are deployed using more than one media channel. The primary media channels are: television, radio, print, direct mail, mobile, and the Internet.
Product Trial - A consumer’s opportunity to test a product or service, usually without charge or with return privileges.
Repeat Purchasers - Customers who purchase from a retailer on more than one occasion, in contrast to those who are deemed “one-time purchasers.”
Retention - Refers to the ability of a company to retain as many of its customers as possible; for example, by reducing churn or increasing repeat purchasing.
Return on Investment - Commonly referred to as ROI this term describes the profit from an investment as a percentage of the amount invested. In marketing programs typically all of the costs associated with a specific marketing initiative are used as the base. The net profits associated with the program are then divided by the costs to determine the ROI.
Reward Sourcing - The activities associated with developing reliable sources of supply or vendors to provide the rewards in a customer loyalty, retention or incentive program.