What are customer Loyalty Programs?

                   Source: (newbrandanalytics.com, 2013)

A loyalty program is a program usually offered by the companies to give rewards to their regular customers. A loyalty program can be of many type varying from a special sale to coupon program. Some companies issue their cards to the customers where a person has to give his personal information so that he can be uniquely identified.

Break Down of Loyalty Programs

Loyalty programs have two primary functions:

· They give the customer a reward for showing loyalty to the brand

· They also provide the company with useful customer related information

Source: (slideshare.net, n.d.)

These schemes are very good way to retain the customers. It is very high for a business to bring in new customers. A business spends on advertisement, different marketing campaigns to get the new customers. That is a lengthy and costly process. So, to avoid the wastage of time and money business tries to retain its current crop of customers. The business earn a lot of profit by opting for the customer loyalty and this program is being used by more and more organisations, companies.

Here is video showing an example of a loyalty programme by Starbucks.




Customer loyalty programs also help a company to get competitive advantage over its competitor. In today’s market, there is abundance of choice for the customer. It is very easy for a customer to find substitute for a product if they don’t like. These programs helps in building up of loyalty and offers much more than just keeping them satisfied.

Customer loyalty programs not only recognises your best customers but also rewards them. This is a big pro of using these programs. These schemes are used to delight your customers and in return the company gets huge chunks of profits.

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Source: (Loyalty Programs, n.d.)

References

(n.d.). Retrieved from slideshare.net: http://image.slidesharecdn.com/customerloyaltyprogrammeril-131216114929-phpapp01/95/customer-loyalty-programme-reliance-retail-limited-4-638.jpg?cb=1387194692

(2013, August). Retrieved from newbrandanalytics.com: https://www.newbrandanalytics.com/blog/wp-content/uploads/2013/08/iStock_000017005101Medium.jpg

Loyalty Programs. (n.d.). Retrieved from Investopedia.com: http://www.investopedia.com/terms/l/loyalty-program.asp