Business Definition for: loyalty program
loyalty program
marketing program designed to enhance brand loyalty by cultivating an ongoing relationship between a marketer and his customer. Successful loyalty programs encourage the consumer to buy frequently, to increase the amount spent each time, and to concentrate all or most of their related purchases on that brand. Most loyalty programs offer perks for membership in a club or program and reward purchases. Rewards may be based on the dollar value of purchases made or on the frequency of purchases. The most wellknown loyalty programs are airline frequent-flyer programs that offer discounts against future travel called award miles. Most large supermarket chains now have frequent-buyer clubs that offer nocoupon discounts as well as newsletters and
affiliate
discounts. Loyalty program tactics also include regular communication with customers such as reminder mailings, private credit cards,
cross-sell
and up-sell offers, satisfaction and opinion surveys, and collection of information for member databases.
See also
frequency discount
Related Terms:
loyalty program offering a discount on future purchases based on how often the customer makes a purchase, without regard to the dollar value of each purchase made; also called frequent user program. By offering frequency-based incentives, the marketer hopes to capture and maintain market share. The VIP perks that come with the top award levels of some frequency discount programs have acquired a social cachet that exceeds the actual financial reward. Frequency discount programs tend to increase spending because consumers will deliberately inconvenience themselves or buy more than they need to earn the awards and status. Frequency discounts are offered by hotels and restaurants based on the number of rooms or meals purchased, offering free room upgrades or free meals. Airline and car rental companies offer free upgrades to passengers who travel a minimum number of miles or who rent cars a number of times, usually within a specified period of time.
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