In Adam’s blog (https://blogs.ubc.ca/adamspottiswood/2011/09/26/loyalty-rewards/), he commented on Shoppers Drug Mart’s Optimum program. He thinks that Shopper’s loyalty program benefits the company since consumers like him feel like they should be loyal to the brand to receive additional benefits. Also, business collects valuable data about transactions that could be used to analyze consumers’ shopping habits. I think loyalty program does give business long term benefit since it helps to better satisfy and retain their consumers. Researches suggest that loyal buyers spend more than causal customers, and visit stores more frequently. And I believe it works much better than merely price discounts which bring in large amount of sales temporarily.
Many companies use loyalty program in their marketing strategy to achieve the objective of developing long term consumer relationship, and we see businesses use it everywhere in our real lives. My purse is filled with all sorts of loyal/membership cards, however, they work in different ways. For example, Safeway club card allows members to buy selected products in stores at lower club price, giving shoppers incentive to use the card frequently through price discounts. The Body Shop membership card allows cardholders to get 10% discount on purchases and an additional $10 off benefit on consumer’s birth month. With Costco’s membership card, you can buy various high quality merchandises at low prices. Though cardholders have to pay a fee to obtain Costco’s member card, people feel it is worth the money. The one I engage most frequently with is Sephora’s beauty insider card. You earn on beauty bank point on every dollar you spend in Sephora. You could redeem various great samples with your points. Beauty insiders always receive emails from Sephora about upcoming special store event and new products. Another great thing is that cardholder receives coupons (up to 20% off) on special dates. Combined with its online shopping website, forum and in store professional sale reps, Sephora is able to integrate several promotion mix tools such as sales promotion and personal selling together to create more satisfying shopping experience for its customers. I think many Sephora’s beauty insiders are like me, feeling rewarded, encouraged to shop there and surprised to find great new products and deals.
In a word, I think loyalty program is an excellent marketing component that is effective in building meaning long term relationships with consumers since based on collected consumer information, business is able to better target and serve individuals. We can see loyalty program as a cost of learning about customers, and it brings additional customer profits is much greater than the sum of investment in loyalty program and loyal promotion costs.