Continue to Part II: Ideas for User Loyalty Programs»
IntroductionLoyalty programs are marketing strategies designed to foster customer loyalty through awarding points or rewards for purchases made. Two of the better known types of loyalty programs are frequent flyer miles offered by airlines, and the points given by credit card companies and their cards are used. The idea of these types of campaigns is to offer customers large rewards in the future for loyal buying habits. Loyalty programs are used extensively in travel related industries, supermarkets, and large department stores. For business owners loyalty programs are great ways to attract customers, gather information, and build customer loyalty. Customers get discounted rates, free giveaways, and other benefits.
CostsDepending on the business loyalty programs cost little to run but can pay off tremendously by keeping customers coming back. The setup costs and implementation however, can run into the tens of thousands of dollars for large companies.
TimeframeLoyalty programs are not necessarily easy to implement, as there is a good deal of software and data collection, not to mention marketing costs, that can be incurred on the front end. Once the system is in place, there is little maintenance required and the only time needed is for new customers to join and to develop brand loyalty.
Action PlanSerious analysis is required before beginning a loyalty program, not to mention the purchasing and setting up of tools, software, and production of cards, if they are to be used. Since loyalty programs are fairly complex systems, hiring an outside consultant or company to do the heavy lifting is typically a good investment. Good data collection is a key to running a successful loyalty campaign. Understanding the demographics of your customers, as well as their purchasing habits, allows businesses to target their customers with precise tailor-made offers.
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