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Frequent Flier miles were offered by airlines in the 1980′s, and grocers were rewarding their customers with green stamps back in the 1970′s, so Customer Loyalty Programs have been around for some time. It’s only over the last few years, however, that loyalty schemes have become so popular, that any business that sells a product or service seems to have one – and the consumer is taking full advantage of them.

Shoppers are becoming more and more sensitive to the price of goods and services they want to buy, and competition among retailers continues to increase. In an effort to overcome these challenges, Customer Loyalty Programs have become a key tool for merchants to attract new customers, and keep the ones they already have.

Customer Loyalty Programs vary from retailer to retailer. Some might offer consumers the benefit of a discount off their current purchase, or a complimentary upgrade. Alternatively, shoppers may have to save points or tokens every time they spend money with the merchant, which can be cashed in once they have collected enough, for the various rewards the scheme offers.

On the face of it, Customer Loyalty Programs seem like a good way for businesses to stand out and attract customers in increasingly competitive markets – getting customers to spend money in the first place, and rewarding them as they continue to spend. However, the real benefit to the retailer, is the amount of data Customer Loyalty Programs allow them to collect about their customers, and not just basic contact information either. Of course, this is useful for being able to market to customers and build even greater loyalty, but the sophisticated Customer Loyalty Programs use detailed analysis of customers’ buying habits to deliver much more targeted marketing messages on an almost individual level.

When done right, this is a very powerful way of reinforcing the loyalty businesses can get from their customers, and loyal, satisfied customers are likely to tell other people about how highly a particular business values them. Not only has customer loyalty been shown to lead to increased spend per customer, it can also lead to an increase in customers as well – both of which are very significant for a business’s bottom line.

Some critics might argue that the amount of private data these advanced Customer Loyalty Programs collect is intrusive. However, as long as the benefits to the consumer outweigh any potential downsides, and businesses use whatever information they collect in a responsible way, the popularity of Customer Loyalty Programs, for retailers and shoppers, is likely to continue.

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