Loyalty program

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A loyalty program is a

chip cards or proximity cards
.

Today, such loyalty programs cover most types of commerce, each having varying features and rewards schemes, including in banking, entertainment, hospitality,

retailing and travel. The market approach has shifted from product-centric to a customer-centric one due to a highly competitive market and a wide array of services offered to customers, therefore, it's important that marketing strategies prioritize growing a sustainable business and increasing customer satisfaction.[2]

By presenting a card, customers typically receive either a discount on the current purchase or an allotment of points that they can use for future purchases. Hence, the card is the visible means of implementing a type of what economists call a

Caesars Rewards[5] (formerly called Total Rewards[6]) and MGM Resorts International's Mlife.[7]

Loyalty programs have been described as a form of centralized virtual currency, one with unidirectional cash flow, since reward points can be exchanged into a good or service but not into cash.[8]

History

For more information on historical loyalty programs, see Loyalty marketing § History.

Betty Crocker's loyalty points program, introduced 1929, ended in 2006, one of the longest running loyalty programs.[9]

By continent and country

Asia

Europe

  • Austria: The two largest loyalty programs in Austria are Payback and mo. JÖ was fully launched in 2019.
  • Finland: The two major retail coalitions with loyalty programs are the
    S-Group with their S-Etukortti card[33]) and Kesko
    with K-Plussa (67%).
  • Georgia: Georgia's biggest loyalty card program has been run by Universal Card Corporation since 2010 via UNICARD.
  • Germany: The largest loyalty program is Payback, launched in 2000.[34][35] HappyDigits [de] and the Shell ClubSmart program are next in size.[35] DeutschlandCard [de] was launched by Arvato in 2008. HappyDigits was disbanded by 2010.
  • Hungary: SuperShop and Multipoint are their main loyalty programs.
  • Italy: After the exit of Nectar from the market in 2015, Payback is the most popular loyalty program.[36] Supermarkets Esselunga, Coop and Il Gigante also have loyalty programs.
  • Latvia: One of the largest loyalty programs in Latvia which is working as an operator for many merchants is Pins.[citation needed] Another is Walmoo
  • Norway: The largest Norwegian loyalty program is Trumf. Trumf is a "brick and mortar" loyalty program owned by NorgesGruppen, a grocery wholesaling group in Norway.[37] KickBack.no is one of the largest online loyalty programs and cashback sites in Norway. KickBack.no is owned by Schibsted Media Group.
  • Republic of Ireland: Superquinn introduced its SuperClub loyalty card in 1993, the prototype for Europe. However, loyalty cards did not expand until 1997, when Tesco Ireland introduced its Clubcard scheme, shortly after its purchase of Power Supermarkets. SuperValu introduced their own loyalty club called Real Rewards. Others were:
    • During the late 1990s—
      Statoil
      . Increasing oil prices ended these in 2005.
    • Electronics Boutique
      's programme.
    • Rewards From Us To You, a hotel loyalty program
  • Russia: MALINA, "the largest multicorporate customer loyalty program in Russia,"[38] was launched in 2006 by Loyalty Partners Vostok.[39][40] Another is Mnogo.ru.
  • Switzerland: Loyalty programs are popular in Switzerland, with the two main supermarket chains, Migros and Coop prominent. The M-Cumulus card can be used at the Migros supermarkets, Ex Libris, SportXX, and other retailers. The Coop Supercard earns points on purchases at Coop and a variety of other associated stores. Other stores such as Interio, a furniture retailer, are also joining the market with loyalty cards and store-based incentivized credit cards. The only coalition loyalty scheme in Switzerland is Bonus Card with a network of over 300 independent retail partners.[41] In recent years, online loyalty programs have also started to target the Swiss. First to make an offering in Switzerland was German-based Webmiles. Claiming to be Switzerland's first online bonus program, Bonuspoints was launched in early 2008 and offers incentives for shopping at 70 different online stores.
  • Turkey: Pegasus Airlines has a loyalty program called Pegasus Plus which gives rewards for every flight. Passengers can spend reward points as a discount without waiting to cover a full flight. Turkish Airlines has a loyalty program called Miles&Smiles.
  • United Kingdom: Passcard (later renamed Passkey) was in the early 1980s.
    Safeway's ABC Card was discontinued in 2000.[47] Maximiles[48] is an online coalition program.[49]
    Formerly operated by British Airways, Airmiles was rebranded in 2011 from Airmiles to Avios, with changes that caused members to pay taxes and fees on flights they used for redemption.[50]

Co-operative Membership: the Co-op Group offers a 2% (previously 5%) refund to members on Co-op branded products with 2% also going to the cardholder's nominated charity. This is only available in Co-op Group stores. It replaced the dividend benefit previously used. Other Co-op chains continue with the dividend scheme, e.g. Midcounties Co-operative. Many of these accept other Co-operative loyalty cards but generally without the same benefits. For instance Midcounties Co-operative accept Co-operative Group cards but there is no charity donation or cardholder refund.

North America

  • Canada: Canadian Tire's Canadian Tire money is the oldest loyalty program in Canada.[51] Air Miles is Canada's largest loyalty program. The food and beverage industry also has several companies with rewards programs.[52]
  • United States: In the US, loyalty cards have a long history.[53] Some are only online.[54][55][56] Some partner with classic credit cards.[57][58] Frequent-flyer programs and, less commonly SeaMiles[59] co-exist with programs that donate a percentage of sales to a designated charity.[60] Some American retailers either have not implemented these cards, or eliminated them, in favor of discounts for all shoppers.[61] Few states regulate club cards. As an example, supermarkets in California are subject to the Supermarket Club Card Disclosure Act of 1999.[62]
  • Mexico: Bonvoy is a hotel-oriented loyalty program.[63]

Oceania

Flybuys is the largest loyalty program in both Australia[64][65][66] and New Zealand.[67]

Mobile loyalty programs

Mobile online loyalty programs

There has been a move away from traditional magnetic card, stamp, or punchcard based schemes to online and mobile online loyalty programs. While these schemes vary, the common element is a push toward eradication of a traditional card, in favour of an electronic equivalent. The choice of medium is often a

Passbook by Apple
is the first attempt to standardize the format of mobile loyalty cards.

Mobile off-line loyalty programs

With the introduction of

near field communication (NFC) technology for mobile applications, traditional contactless smart cards for prepaid and loyalty programs are emulated in a smartphone. Google Wallet
adopted these technologies for mobile off-line payment applications.

The major advantage of off-line over the online system is that the user's smartphone does not have to be online, and the transaction is fast. In addition, multiple emulated cards can be stored in a smartphone to support multi-merchant loyalty programs. Consequently, the user does not need to carry many physical cards anymore.

The term also is used regarding linking rewards for online and offline purchases.[75][76]

Disloyalty cards

In Boston, Toronto and London, some independent coffee shops have set up experimental "disloyalty card" programs, which reward customers for visiting a variety of coffee shops.[77][78]

Criticism

Evidence for the effectiveness of loyalty programs is controversial. Many companies are unsure whether and how to use customer loyalty programs profitably. Many programs (regardless of location, size, or industry) are run without the appropriate metrics or target parameters.[79]

Some companies complain that loyalty programs discount goods to people who are buying goods anyway.[53] Moreover, the expense of participating in these programs rarely generates a good return on investment. The Forte Consultancy Group regards loyalty programs as bribes.[80] In the case of infrequent spenders, loyalty fees provide a means of subsidizing discounts.

A 2015 study found that most supermarket loyalty cards in the United States do not offer any real value to their customers.

RFID technology into loyalty-card systems.[85]

One may view loyalty and credit-card reward-plans as modern-day examples of kickbacks.[86] Employees who need to buy something (such as an airline flight or a hotel room) for a

credit-card rewards or loyalty points instead of minimizing costs for their employer.[88]

See also

References

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  86. ^ Compare: Gup, Benton E. (1990). Bank Fraud: Exposing the Hidden Threat to Financial Institutions. Rolling Meadows, Illinois: Bankers Publishing Company. p. 85.
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  87. ^ Kowalik, Frank (1991). IRS Humbug: IRS Weapons of Enslavement. Oakland Park, Florida: Universalistic Publishers. p. 46.
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