Loyalty stands for faithfulness while loyalty program is a reward program that is offered by companies to the customers to encourage their buying behavior. From the company’s point of view, this is done to benefit the firm. They are strategies or structured marketing efforts offered by a company to their customers who make frequent purchases. This is done to know consumer behavior as what will make them buy a particular product and to increase customer loyalty. Loyalty rewards program brings commitment from the customer’s side and less aversion towards the company thus benefiting the two.
THE FOUR MAJOR EFFECTS OF LOYALTY PROGRAMS ON CUSTOMERS LIFELINE:
- CUSTOMER SATISFACTION
Customers are satisfied with their shopping due to which the business gains happy customers. Companies that offer consumer loyalty programs have programs that have a long positive effect on consumer behavior and customer satisfaction. This is because the customers are consistently exposed to the complete environment of service experiences that can make them stick to the same company rather than moving on to another one.
- CUSTOMER ENGAGEMENT ACTIVITIES
With the help of these programs, customers become more engaged with the company by spending and participating more than ever. This way customer’s loyalty will also increase and they will start interacting with the company on every possible channel treating it as their own. They will feel that the brand is their personality and this will lead to more revenue generation for the company because of the greater number of purchases and a greater spending by the customers.
- RETENTION OF CUSTOMERS
Loyal customers spend higher than one time customers because they are able to relate themselves with the brand emotionally. The more loyal the customers are, less will be the threat of the competitors for the company. Customers that trust the company will only stay back and customer retention begins from there. Once they start trusting the company, the company can start making recommendations and sell across its product lines. The longer the customer enjoys the loyalty program, the more they will want to stick to their brand.
- PERSONAL RELATIONSHIPS
A loyalty program will influence the customers to buy more ultimately achieving Customer Lifetime Value which is the net profit calculated for the relationship maintained between the customer and the company throughout its lifetime. When the company shows the customers how they truly value them, an emotional connect is built as each customer is treated in a unique way. Since the needs of the customers are changing day to day, these programs will cater to their needs by satisfying them in a different way and this way, a personal relation, and a strong bond is built between the two.
Rewarding the customers will certainly benefit them as well as benefit the company in a multitude of ways. Thus, loyalty programs will shift the mindset of the consumers from a narrow minded myopic perspective to a dynamic multiple decision making perspective.