What are loyalty programs?
Loyalty programs are described as being structured marketing strategies, designed to give confidence to customers to continue to shop at or use the services of a business, as stated in the journal “Loyalty Programs and Their on Repeat-Purchase Loyalty Patterns”. (Sharp, Byron, & Anne, 1997). In addition, loyalty programs can be translated also as rewards for customers. The rewards mostly consist of coupons, rewards, free merchandise, etc. (Kolowich, 2015)
As Parsons (2016) mentions, the loyalty programs have a risky part as well. This comes from the idea that if a loyalty program is not handled correctly it can bring more loss than benefit for both consumers and providers. According to Loyalive platform, consumers can lose a year almost $1 trillion while the business loses its clients. (Parsons, 2016)
Loyalty programs bring customer intimacy
According to Person (2012) in the book “The Loyalty Leap”, analyzing a customer’s data can help a business to link an emotional loyalty with its customers. Also, it is mentioned that the loyalty programs have the aim of reactivating the customers several times before they leave the brand.
Loyalty programs can bring irrational behavior to its users. As for example, some customer might make use of products or services they not necessary need, just to collect loyalty point on their cards. This behavior can be translates also as emotional loyalty. (Pearson, 2012)
One of the common used loyalty programs are the loyalty cards. The loyalty cards can be described as a document of identification from a certain company under the own name of a consumer. (Janotta, 2014). The loyalty cards are using magnetic strips in order to record the transactions a customer makes being rewarded with discounts, products and so on. The reward system has to depend on the amount spent. The more spent, the higher the reward.
Some examples of businesses in the hospitality industry which are making use of the loyalty cards are:
- Hilton Hotels&Reports: By making use of their services, the customers can acquire points which can be spent on hotel, travel and shopping rewards, according to hilton.com/ (2016)(Hilton HHonors )
- Marriott: They give points on the REWARD CARD according to the amount spent on their locations. The reward consists of exclusive dining weekends, free night stays or access to exclusive events, creditcards.chase.com (2016) mentions.(MARRIOTT INTERNATIONAL)
Hilton HHonors . (n.d.). EARN & USE POINTS. Retrieved Sept 19, 2016, from Hilton: http://hhonors3.hilton.com/en/earn-use-points/overview/index.html
Janotta, S.-M. (2014). Loyalty cards in the apparel industry in Germany and Spain. Hamburg.
Kolowich, L. (2015, July 1st). Where Marketers Go to Grow – 7 Customer Loyalty Programs That Actually Add Value. Retrieved September 18, 2016, from HubSpot: http://blog.hubspot.com/blog/tabid/6307/bid/31990/7-Customer-Loyalty-Programs-That-Actually-Add-Value.aspx#sm.000191bndy2jseyvpba1cawrastf1
MARRIOTT INTERNATIONAL. (n.d.). Marriott Rewards. Retrieved Sept 19, 2016, from Marriott: http://www.marriott.com/marriott-rewards/earn.mi
Parsons, M. (2016). Tap the phone to claim your reward. London: Raconteur Media Ltd. .
Pearson, B. (2012). The Loyalty Leap: Turning Customer Information into Customer Intimacy. Portfolio; 1st edition (May 10, 2012).
Sharp, Byron, & Anne, S. (1997). Loyalty Programs and Their on Repeat-Purchase Loyalty Patterns. International Journal of Research in Marketing , 473-86.