Posted in Marketing and Strategy Terms, Total Reads: 324
Definition: Customer Programs
Customer programs, also known as loyalty programs, are structured marketing efforts that reward, and so encourage loyal consumer behaviour for the benefit of the firm. Such programs offer a loyalty card, rewards card or points card to the member customer as tangible membership identification.
In today’s competitive world, the need for customer programs is encompassed in the following points:
• To show customers that they are important and valued
• To encourage repeat purchases and loyalty
• To help the brand gather customer contact and demographic details
• It acts as a cheap advertising vehicle (for example, word-of-mouth advertising)
There are many ways in which brands can set up their customer programs. These include using a simple reward points system (like Reliance Fresh), using a tier system to reward initial loyalty and encourage further purchases (like Pantaloons), charging a fee for VIP benefits (like LinkedIn),
Customer programs can either act as a gift or as a curse. When executed well, they can turn customers into loyal brand advocates. However, when done wrong, they are a huge waste of time and resources, and become a burden for uninterested customers.