Customer Reward and Loyalty Programs: History

Most reward and loyalty systems were initially launched by airlines, hotels and their additional services. Presently, hotels, restaurants, coffee shops and various stores provide services as customer rewards to persuade these customers to use their services again.

In 1980, American Airline announced that it would reward passengers based on the total distance traveled. Their rewarding method was very simple; Whenever the total distance traveled by a passenger reached 10 thousand (in miles), a free ticket from New York to Chicago would be given to the passenger. As simple as that, this company made their customers proud of the services provided by this airline and not by other companies. Therefore, many customers were attracted to this company.

Whatever is attractive to the customers will be conveyed to others through word-ofmouth advertising and it will create a wave that persuades others to use your products and subscribe to your services or see your brand as the best.

Currently, in the US market which holds and dominates over one-fourth of the world’s economy, customer reward programs are so promoted that most people are using it. This fact shows how appealing reward system is when it has involved a large part of the market. Even the small portion of the market which lacks a reward program is indirectly involved with this system.

The research indicates that a part of what people buy is not necessarily their immediate needs. People make many purchases only because of the points they will receive when they make such purchases. For example, a customer is in a situation where making a purchase will give him/her enough points to get rewarded. So, the customer makes the purchase and these purchases will continue for as long as the customer keep getting rewarded. Inadvertently, these purchases collectively increase the sales volume of a company.

Customer Reward and Loyalty Programs: Importance

When customers feel they have earned more values by using your services, it means your services are more interesting than that of your competitors, and it makes your customers talk about you and persuade others to use your services. Loyal customers encourage others to join your customer club and as a result, your company will be in a better position in comparison to competitors.

Have faith that a customer reward system will result in development and prosperity of your business.

The problem with many businesses is that they want to apply the customer reward method and, at the same time, they want to refuse to give this point and reward to all of their customers! The reason is that they still don’t believe in the impact of the reward system on prosperity and profitability of their businesses. They are under the wrong impression that these points are extra cost imposed on the business and if a great number of customers use this system, it will harm the business. That is why they try to hide the system and avoid providing transparent information to their customers regarding how to use the system.

You must understand that loyalty reward system is directly related to the marketing and sales section of a company and it will directly influence the amount of revenue eventually generated by the company.

By rewarding your customers, not only don’t you reduce your profit, but also you guarantee your gain, keep your current customers and pave the way to attract new customers.

Recently, I had numerous flights with an airline. When I contacted them to collect my reward, they said I could only receive points and use the benefits when I sign up in their system. Whereas they hadn’t provided any notification regarding this matter, and other customers and I had no knowledge of this system and the conditions of receiving points.

As a business, seek to introduce your reward and point based system and inform all your customers of conditions of receiving rewards.

Attracting even one more customer has a great positive influence on your business and you should not ignore that. Currently, most businesses have discovered the importance of customer reward system and they try to introduce this system to their customers more and more so their customers join the system and use its services.