Loyalty programs offer rewards, discounts, or other special incentives as a trade for customer’s loyalty and repeat business. It aids customer retention.
What Are Loyalty Programs???
A marketing system businesses use to reward their customer’s purchasing behavior to encourage the customers to stay loyal to the company.
Rewards can be in the form of movie tickets, spa retreats, getaways, discount coupons & more.
How Does It Work???
A customer loyalty program has 3 parties involved:
A Company with the loyalty program which issues the points.
Customers who earn points for buying products and services from this company.
Third party tie-up partners who give away rewards to customers in exchange for the points earned by the customers.
The Model
A customer loyalty program has 3 parties involved:
Based on transactions
Web/Mobile Platform Login
POINT REDEMPTION
via Merchant Special Rewards ( Discounts, Gifts)
via Cashback
via Giftcards
via Airtime
via Special Giftcards (Apple iTunes, health plus, spar, etc.)
Business Benefits Of A Customer Loyalty Program
Customer retention.
Foster brand advocacy.
Identify unprofitable customers.
Build relationships.
Win back customers.
Customer development.
Reduce advertising costs.
Acquire new customers.
Buy More: Increase cross sell and upsell ratios by meeting more of the customer’s needs.
Insights: Leverage data to create targeted.
Personalized communication.
Increase sales.
Increase ROI.
WIN-WIN MARKETING PLAN FOR ALL
The service providers pay the tie up partners for the rewards given away to the customers. Tie up partners like this arrangement as they make sales while expanding their customer base.
Even though the service provider covers the cost of the rewards he still earns profit from the customer by issuing points at a value that is still profitable for them.