“Keep them coming back for more” has long been the anthem of retailers. Through the induction of loyalty programs, companies are creating a legion of dedicated consumers like never before. It is now estimated that a whopping seventy-five percent of consumers belong to a loyalty program, and buyers who belong to two or more loyalty programs now account for one third of the buying public. Why so popular? A loyalty program benefits businesses and buyers alike.
While the loyalty program is not a new concept, it has been redesigned over time to offer greater rewards for consumers and appeal to a larger share of the buying public. The first loyalty programs introduced to the consumer market came in the form of trading stamps offered through grocery stores. Once collected and pasted into small booklets, the stamps could then be exchanged for a host of useful household items. The attraction of earning stamps for everyday shopping enticed housewives in the 1950’s and 60’s to select food stores based on whether they offered the service, and the first loyalty program was born. Seeking even greater bang for their bucks, savvy shoppers could double or triple their rewards by shopping on certain days of the week. Grocery chains quickly learned this early form of loyalty program paid off well by bringing in more shoppers on days normally considered slow traffic days.
The next generation of loyalty programs came along in the 1970’s when the competitive airline industry began offering frequent flyer miles. It wasn’t long before hotels chains followed the trend with their own version of the loyalty program. These are two of the longest standing and most successful loyalty programs on the market today, boasting millions of participants worldwide. Now loyalty programs are springing up in new markets. Restaurants, financial institutions, credit card companies, auto insurance, and retailers are each jumping onboard and offering their own version of loyalty programs. While consumers benefit through deep discounts, bonus points, free products and other attractive rewards, companies gain valuable insight on buying trends, shopping habits, and how consumers spend their dollars. Through constant monitoring of loyalty program participants, companies can revamp their programs and add new services based on data gathered. Even smaller businesses are adding loyalty programs to their marketing arsenal to attract new customers, as well as retain existing ones. With no sign of letting up, loyalty programs have proven to be highly successful.