Lesson 8 Sales and Marketing

Lesson 9: Sales and Marketing 9.10 Loyalty schemes

• ‘Loyalty programs are structured marketing efforts that reward, and therefore encourage loyal buying behaviour – behaviour
• which is potentially beneficial to the firm’ (Sharp & Sharp, 1997).
• Loyalty schemes and cards are a system of the loyalty business model.
• Cards typically have a barcode or magstripe for scanning some are even chip cards.
• Small key ring cards (keytags) serve as key fobs used for convenience in carrying and ease of access.
• The five most common kinds of loyalty schemes (are as follows)
• Rewards: award points for purchases, unrelated to brand, used to differentiate your brand and attract new customers, used with limited product
• lines, administration can be complex – needs special equipment, cards and database systems to optimize the benefits. Members expected to track
• and redeem their points on-line (i.e frequent diner programs).
• Rebate: awards a gift certificate redeemable for the next purchase, when guest reaches a certain spending level. Wide selection of products, this
• reward program good for motivating new incremental purchases, increase store traffic. Department stores use this to increase additional sales from
• existing guests. (i.e. Coffee Cards, Clubs and casinos where card holders have a swipe card which accumulate points from gambling spends
• towards F & B purchases).
• Appreciation: Goal is to increase your customers’ LTV (lifetime value), not to acquire new guests. Also used to get good customers to sample
• more of your products. Airlines, hotels, phone companies used this to accumulate points for additional services within their own brand (seat
• upgrades, free tickets, hotel stays at different locations).
• Partnership: rewards a guest’s accumulated purchases with a partner’s products or services. Primary goal is to acquire new guests where you
• have a partnership arrangement to use the partner’s extensive guest database. Airlines use this frequently when they give you points for renting cars
• and sleeping in hotels. Works well in small rural areas with businesses (shop local concept, local loyalty rewards).
• Affinity: Used where rewards are no longer needed to cultivate a long term relationship. Offers special communications, value added benefits
• and bonuses and recognition as a valued guest.