Customer Loyalty Programs are nothing new. Most people would probably point back to the Frequent Flier miles the airlines used to offer in the 80’s as the very first loyalty schemes, or maybe even the green stamps that grocery customers were rewarded with in the 70’s. The truth is, Customer Loyalty Programs have been around even longer than this, but it’s in the last 10 years where they have become so popular, that consumers can join a loyalty scheme for just about anything they might want to buy.
More and more customers are looking for the cheapest possible price for the products and services they need to buy, and competition among retailers is as fierce as it has ever been. This is why Customer Loyalty Programs have become a popular way for consumers to achieve even greater value for money, and for retailers to keep shoppers spending their money with them.
When someone signs up to a Customer Loyalty Program, they are either rewarded with an immediate benefit every time they spend money with the merchant, or each purchase counts towards a reward at some point in the future. An immediate reward could be a discount off their purchase, or an upgrade free of charge; and the customer would qualify for whatever future rewards the program was offering once they had saved up the number of points or vouchers they needed.
In their simplest form, Customer Loyalty Programs are used by retailers to help attract new customers, and reward them so they want to keep spending money, instead of going elsewhere. However, the more sophisticated loyalty schemes are able to make use of the most valuable product of just about any Customer Loyalty Program, and that’s the data that can be collected about the consumption habits of members in the program. As well as being able to use their contact details to market to these customers directly, it’s possible to build even stronger relationships with them by tailoring these messages based on accurate and detailed information about their spending habits.
The majority of loyalty scheme members respond much better to this customer-specific marketing, and as well as creating even greater loyalty, it makes them more likely to tell others about how well they are being treated. Valued customers are therefore great for improving a business’s turnover directly, through their increased spending, and indirectly, through the new customers they refer.
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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