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.

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.

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.

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.

Some critics might argue that the amount of private data these advanced Customer Loyalty Programs collect is intrusive. However, as long as the benefits to the consumer outweigh any potential downsides, and businesses use whatever information they collect in a responsible way, the popularity of Customer Loyalty Programs, for retailers and shoppers, is likely to continue.

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