Customer Loyalty Program in Retail Marketing. MBA Marketing study material.

Offering extra rewards or membership invitation to the customers is nothing but the customer loyalty program conducted by the retailers. The aim of customer loyalty program in retail marketing is to influence the loyal customers to keep coming back to store for more and to increase the footfall of newbies to the store ultimately increase the sales. What exactly it means and how can it help to retail marketing? Let’s have a look in brief:

What is a Customer Loyalty Program??

It is a planned strategic program which aims to retain the customers by giving rewards, benefits or additional privilege in every purchase to them for their loyalty and regularity towards the brand.

It is the most powerful customer retention tool because delighting to loyal customers is very important only through which the mouth publicity can take place.

Also, offering rewards, bonus or any benefits to the customers will lead to encouraging them to spend more to get more through which retailers can reach a sales goal.

A successful customer loyalty program is eventually an overall success of retail marketing.

Ways to Build Customer Loyalty

There are numerous forms of rewarding the existing customers and evaluation is going on and on. But some of the popular ways are explained below:

·        Points:

Point redemption or point privilege in the retail store is very popular customer loyalty program. Customers can earn the points according to the retailer’s policy in their every frequent purchase. These points will be converted into the money or discounts or coupons etc. when customers are going to use it while next purchase. However, a points system is the only concern with to earn and spend in the same store or with the same brand and cannot use it with the other as it doesn’t include cash back policy. The main form of work of this program is to motivate the customers to come back, again and again, to spend more and more in the same store.

·        Tiered System:

A tiered system of customer loyalty program is basically a process of analyzing customer purchase behavior, recording their purchasing milestone and grouping them accordingly,   considering the frequency of purchase and how much money they spent, and offering them the rewards, prize or discounts by bearing in mind the purchasing milestones. Usually, the big scale industries are commonly using the tier system such as airlines, hospitality or insurance and banking etc.

·        Upfront Fees:

The Dictionary meaning of upfront fee is the payment before purchasing in advance. But how it can be a loyalty program for retailers? Yes, it is possible through analyzing the reasons of low footfall and customized it with charge some amount or fee to customers to detour the common purchasing obstacles. This loyalty program is beneficial for both the retailers and the customers. Amazon Prime is the best example of upfront fees loyalty program which offers you a free shipping by paying some bucks.

·        Discounts, Rebates, Cash Back:

After points system, discounts, rebates, and cash backs loyalty programs are commonly used by retailers to engage the customers and influence them to spend more. Discount or cash back is an immediate monetary benefit which can be applied for a certain period of time on any purchase. Rebate is a refund benefit for the customers who already paid for their purchase. Rebate is not an instant money benefit.  

·        Free Gifts, Free Service:

Distributing gifts and providing free services are the part of paid customer loyalty programs adopted by the retailers to maintain long-term customer relationship and build a customer loyalty. This kind of customer service can be expensive for the retailers but it may increase the footfall in store. 

·        Become a Partner:

Customer retention and customer engagement may force the retailer to make a strategic partnership with other. This strategic partnership can be effective for growing the sales, business and customer loyalty as well. To get the full benefit of this program, retailers have to check the suitable partner who is selling substitute products eventually helpful for the customers.

Customer loyalty program may vary from business to business depends on the size of it and product or service to be sell. But this is the most core area of marketing environment and without this retailers cannot sustain in such a widely spread competitive marketplace.