Oct 31st, 2016. Posted in: News
A Customer Loyalty Program is a marketing tool used by all types of businesses to motivate repeat customers by offering some type of reward system. Customer Loyalty Programs are used by the largest U.S. retail and restaurant chains, customers have come to expect some type of Customer Loyalty offer.
Find the definition of a Customer Loyalty Rewards Program, along with examples of current successful loyalty programs running in retail and restaurant chains.
Also get info about the benefits of building a Customer Loyalty Program to the retail or restaurant chains that use them.
A customer loyalty program is a structured and long-term marketing effort which provides incentives to repeat customers who demonstrate loyal buying behaviour.
Successful programs are designed to motivate customers in a business’s target market to return often, make frequent purchases, and outshine competitors. In retailing, these programs generally reward loyal customers with discounts, special offers, rebates, points, or freebies.
Also Known As: customer rewards program, customer retention, loyalty incentive program, frequent purchase program, frequent shoppers program, frequent buyer club, customer satisfaction program, rewards program, customer appreciation program, loyalty platform.
Common Misspellings: customer loyalty program, customer loyal program, customer loyalty program, customer loyalty program, customer loyalty program
Examples of Current Retail and Restaurant Customer Loyalty Programs
Customer retention is the primary goal of a retail customer loyalty program.
The Cost Per Acquisition (CPA) for a new customer is often much higher than the costs of the discounts and freebies awarded to them through a customer loyalty program system.
Data collection is also an important goal of retail and restaurant customer loyalty programs. Demographic and purchase data can be used to create ultra-targeted marketing and advertising programs which should result in cost savings. Retailers must proceed with caution when using customer data, however, because what might seem like “personalization” to the retailer could be perceived as an invasion of privacy by the customer.
Customer loyalty programs can help a retailer win a larger “share of wallet.” That is, the percentage of disposable income that customers spend with any one retailer. Motivated increased spending from one loyal repeat customer with strategic loyalty program offers is much easier than motivating infrequent customers to spend anything at all.
Customers join loyalty programs primarily to receive discounts and earn freebies. For the most active users of a customer loyalty program, working “the system” to maximize the rewards received is both a challenge and a source of entertainment.
Some customer also like the exclusivity of being a member of “the club.” Members-only products and services make them feel important and special.
Because of the pervasiveness of customer loyalty rewards programs in the retail and restaurant industries, there is plenty of research studying every aspect of the programs. Here’s some key data that reveals why customer loyalty programs can give retailers a competitive advantage.