Loyalty programs are systems that improve the organizations' customer retention levels.These schemes boast the business' profit and avoid incurring extra costs when venturing in a new business. They also offer customers advanced access to newly launched products and special sales coupons. In most cases, companies offer their regular customers a unique identifier upon provision of their personal information. Therefore, through loyalty programs customers are rewarded for being loyal to the company upon provision of their wealth information. Moreover, loyalty program provides the company with additional information such as the effectiveness of different cards. The paper will discuss the consumer loyalty programs, outline its attributes, and give relevant information of a chosen loyalty program.
In a competitive market, consumers may quickly switch to suppliers loyalty programs hence improving suppliers' profitability. In addition, building a loyal customer is not enough because they may tend to purchase goods from a competitor the retailer does not offer to them something extra such as a discount. Therefore, retailers and wholesalers can increase their loyalty by rewarding and recognize their best customers. Loyalty programs are preferred by retailers and suppliers because they increase their profitability (Liu 21). Secondly, loyalty initiatives enable organizations to focus on their best customers and improve buyer satisfaction levels. As a result, clients are always willing to pay more hence boasting the sellers' cash flow. This is because loyal customers become the organization's best advocates. Lastly, loyalty schemes measure retailers or sellers marketing success. This is because they increase customer retention and happiness rates through metrics such as Net promoter score, Negative Churn, Customer Effort Score, and Customer Retention Rate (Wendlandt and Ulf Schrader 297).
In my opinion, companies realize a positive returns on the financial investments made to their loyalty programs due to the following reasons. First, increasing loyalty programs in an organization also increases returns (Liu 23). This is because loyalty programs determine the amount of goods clients can buy from a given company. Secondly, loyalty programs encourage organizations to sell more goods and services to the existing customers than new clients as a way of increasing their revenue and profitability. This is because existing customers have confidence because they had previously purchased goods from a given organization. Sales records help retailers to determine useful products to their existing customers. Lastly, loyalty programs breakdown barriers between businesses and customers. For example, Boloco company make use of a simple point system where customers using Boloco card to get a free items for every $50 percent spent.
In the case, am hired to implement the Fortune 500 organization consumer loyalty program, I will come up with a tiered system as the organization's loyalty program. In this program, customers will earn slight rewards in every purchase he or she makes from the organization. The value of the reward will then increase as the frequency of purchases increases. This means that customers' reward gets larger up the loyalty ladder. Customer will be eligible to redeem his or her rewards if he or she has 25% rewards on the purchases made. I would take advantage of the information collected from the customers on the tiered loyalty program system to enhance the customer experience. This is because the information will give a clear impression of how consistent consumers make purchase (Wendlandt and Ulf Schrader 297). In addition, the information will encourage customers to make more purchase in order to get more rewards and redeem. As a result, more customers will get more rewards hence customer will gain more experience. The program also gives small reward depending on the amount customer purchases from the company. Moreover, the reward gets larger as the client moves up the loyalty ladder hence the program provides an excellent return on a given investment.
Liu, Yuping. "The Long-Term Impact of Loyalty Programs on Consumer Purchase Behavior and Loyalty." Journal of Marketing. 71.4 (2007): 19-35. Print.
Wendlandt, Mark, and Ulf Schrader. "Consumer Reactance against Loyalty Programs." Journal of Consumer Marketing. 24.5 (2007): 293-304. Print.