Loyalty programs are deliberate marketing efforts that influence customers’ buying behaviour. In short, these programs aim to influence users to buy more from products listed under the loyalty program – in addition to or instead of non-loyalty program products.
These programs go by the names of: rewards program, savings club, points program, gold membership etc. However, programs like Costco’s membership and Amazon prime do not fall under the same category. They are unique “privilege loyalty programs” and I hope to cover these in a separate post. With that clarified, lets get into the objectives of a loyalty card program;
Primary objectives of Loyalty Card Program
The primary objectives of the loyalty programs include:
- influence and increase single brand loyalty
- decreased consumers price sensitivity by introducing other variables of points, cashback, coupons etc.
- introduce consumer resistance to competing offers or products
- increase the desire for consumer to consider alternative brands
- attract and retain a larger pool of customers
The secondary objective is more defensive:
- motivated by fears of competitive parity
- to maintain the current customer base by building a closer bond
- de-risk the business by creating a database of customers
The peripheral objectives include:
- supplementing trade relations with the brands
- getting brand PR dollars and campaigns to their retailers
- establishing partnerships and alliances
Furthermore, understanding the history of loyalty card programs will help you understand why how and why these programs came about.
Lastly, many of the loyalty programs don’t succeed and its important to understand key success factors for a loyalty card program.