What are customer loyalty programs?

Customer loyalty programs are systems set up by retail and service companies to maintain customers. The culmination of most such programs is the plastic card that the customer has ran down every time they buy something from business. The card provides consumer information and can also strengthen the custom of the consumer to trade in this company. Sometimes the card also provides side benefits. Almost every main supermarket or hotel chain has a card they issue for consumers. According to some reports, the average family is a member of 14 such programs! Partly the blame is the effect of the car; As soon as one company in the field creates a loyalty program of customers, motivation for others will become much greater.

For the company is one of the biggest advantages of the customer's loyalty program information that provides consumption. Companies usually promise to store and transmit aggregated information - that is, individual shoppers will be anonymous. Even with thisThey are able to collect a large number of useful data. For example, supermarkets with customer loyalty programs can easily monitor what items people often buy together, and then put these items into the store to encourage shoppers to buy this combination.

Real customer loyalty can also sometimes result from customer loyalty programs. If a particular store requires them to make a special card, shoppers can attract the shops with which they have existing relationships. As a result, the entry barrier for further business is slightly higher. Real rewards can also increase customer loyalty. People are more likely to buy coffee from the same place if their tenth cup is free. In general, smaller institutions use this type of system more often.

Customer loyalty programs can also serve as a form of price discrimination. Price discrimination is a procewith accounting two different prices for the same item. If possible, this technique is ideal for the company because it can get more money from those who are willing to pay without freezing those who were willing to pay a lower price. By marking certain items and then offering the discounts resulting from the customer loyalty card, the supermarket can make people feel as if they save money, while extracting extra money from consumers who don't care to get the card.