Loyalty Programs - The Real Nature
Loyalty programs have found a way right into the hearts of Americans and this is evident with the numerous accounts of programs that are launched. Customers need reward programs that suit their expectations. This in turn motivates the vendors to chameleon their programs to meet the needs of different classes of people.
By delving deeper into the programs launched by Amex, we find that those programs have an array of awards for larger number of products right from computers to golf clubs. Besides that, they have special provisions for purchase of points too. The travelling expenses incurred by many businesses, when turned to points by your next filling station, draws in an enthusiastic reception from the fillers.
The innovators have taken this wondrous scheme of loyalty programs further by extending their services to Retailers and Restaurants. These restaurants in fact then pronounce the spell of their beneficiaries to the diners, and the public has diner's card! The usage of cards in the business era has left a tremendous impact over the masses, people prefer cards compared to the traditional exchange of cash.
Numerous theories lie in hold regarding the nature of loyalty. On the aspect of loyalty programs, there are many conflicts with the nature of satisfaction over spending. This relationship between the two, wherein satisfaction occurs due to loyalty is still a big question. There's a huge expanse between the satisfaction theory and loyalty programs, many of those loyalty programs tend to be seasonal and they don't last for more than a month.
Reichheld, of Bains and Co. puts in like this, the criteria of a loyalty program depends on its "domino effect" that is, if the loyal customer tries to bring in additional customer just by satisfaction factor, then it could literally mean millions of dollars.
He also mentions the possibility of including a majority of the economic classes, as he infers that most of the programs are concentrated only on higher classes of people. It would total around twenty to thirty percent of their customers. He also mentions the consequence of such issues saying that this winds up with one third of their customers quitting early within a month or so. Thereby this loyalty cards and programs serves as a check valve to estimate the number of monthly users and also to compensate the loss of the waning customers either by attracting them back or introducing a newer segment of consumers.
Surprisingly a wonderful theory on the same is mentioned by him as the relationship of consumers with the company is directly proportional to the profits .Analysts suggest that offering an in- class product isn't just enough for the survival of the fittest in this evolutionary field of business. It is also about sharing with them and extending the relationships. Moreover it plays an influential role in deciding the charts of profit for the next year. Many strategies have been included for these researches such as Database Marketing, wherein the mission statement goes like these "Customers are Gods , so don't treat everyone equal "