A loyalty program is a rewards program offered by a company to customers who frequently make purchases. A loyalty program may give a customer free merchandise, rewards, coupons, or even advance released products.
1) Simple point method:-This is the most common loyalty program methodology. Frequent customers earn points, which translate into some type of reward. Whether it’s a discount, a freebie, or special customer treatment, customers work toward a certain amount of points to redeem their reward. Where many companies falter in this method, however, is making the relationship between points and tangible rewards complex and confusing.
2) Use a tier system to reward initial loyalty and encourage more purchases.
Finding a balance between attainable and desirable rewards is a challenge for most companies designing loyalty programs. One way to combat this is to implement a tiered system which rewards initial loyalty and encourages more purchases. The biggest difference between the points system and the tiered system is that customers extract short-term versus long-term value from the loyalty program. You may find tiered programs work better for high commitment, higher price-point businesses like airlines, hospitality businesses, or insurance companies.
Author: Poonam Soni