A Guide To Card Loyalty Programs
Frequent Flier miles were offered by airlines in the 1980′s, and grocers were rewarding their customers with green stamps back in the 1970′s, so Customer Loyalty Programs have been around for some time. It’s only over the last few years, however, that loyalty schemes have become so popular, that any business that sells a product or service seems to have one – and the consumer is taking full advantage of them.
Every year, businesses spend billions on providing Customer Loyalty Programs for their customers. With increased competition in most markets, and consumers becoming more and more price-sensitive, many retailers have found loyalty schemes are essential for attracting new business, and stopping the customers they already have going elsewhere.
Most Customer Loyalty Programs work in one of two ways. The customer will get an immediate reward for being a member of a loyalty scheme; for example, they will get a preferential discount or complimentary upgrade when they make a purchase. Alternatively, the scheme may offer a deferred reward based on continuing customer loyalty and spending, at some point in the future; so customers have to collect points, tokens or stamps, which they can then cash in for discounts, free offers, or whatever else the scheme offers.
Customer Loyalty Programs are not just about offering discounts to attract new customers, and a range of rewards to keep existing customers spending money. They are a source of accurate and valuable information on the buying habits of consumers in the scheme, which the more sophisticated loyalty schemes are able to use to create even greater levels of loyalty from their customers. With information such as how much customers spend, how often they buy, and what products they buy regularly, businesses can tailor their marketing to suit different groups of consumers, even individuals. Receiving messages that are more relevant to them, makes customers feel valued, and therefore more loyal to the merchant.
When done right, this is a very powerful way of reinforcing the loyalty businesses can get from their customers, and loyal, satisfied customers are likely to tell other people about how highly a particular business values them. Not only has customer loyalty been shown to lead to increased spend per customer, it can also lead to an increase in customers as well – both of which are very significant for a business’s bottom line.
There have been concerns over the amount of data that Customer Loyalty Programs collect, and how they plan to use this private information. But with consumers seemingly happy to let businesses keep track of what they spend, and how, as long as the rewards keep coming, it looks like loyalty schemes will continue to grow in popularity.
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