Loyalty programs actually date back to the 1850s, with their first documented use by a New York soap seller. Source: Everyday Rewards and Flybuys
Loyalty programs enable firms to offer significantly lower prices to some of their customers. You’d think this would encourage strong competition.
But that isn’t always what actually happens. New research shows that paradoxically, by changing the way companies target customers, loyalty programs can sometimes reduce price competition. The research also points to solutions.
A win-win proposition?
Joining a loyalty program is supposed to be a win-win. You – the customer – get to enjoy perks and discounts, while the company gains useful commercial insights and builds brand allegiance.
For example, a hotel chain loyalty program might reward travellers for frequent stays, with points redeemable for future bookings, upgrades or other benefits.
ABOUT THE AUTHORS
Handpicked for you
Emerson: Shield SMEs from supermarket “retribution”, encourage $5 million compensation payouts
COMMENTS
SmartCompany is committed to hosting lively discussions. Help us keep the conversation useful, interesting and welcoming. We aim to publish comments quickly in the interest of promoting robust conversation, but we’re a small team and we deploy filters to protect against legal risk. Occasionally your comment may be held up while it is being reviewed, but we’re working as fast as we can to keep the conversation rolling.
The SmartCompany comment section is members-only content. Please subscribe to leave a comment.
The SmartCompany comment section is members-only content. Please login to leave a comment.